In the present study we examined the neural correlates of facial emotion processing in the first year of life using ERP measures and cortical source analysis. EEG data were collected cross-sectionally from 5- (N = 49), 7- (N = 50), and 12-month-old (N = 51) infants while they were viewing images of angry, fearful, and happy faces. The N290 component was found to be larger in amplitude in response to fearful and happy than angry faces in all posterior clusters and showed largest response to fear than the other two emotions only over the right occipital area. The P400 and Nc components were found to be larger in amplitude in response to angry than happy and fearful faces over central and frontal scalp. Cortical source analysis of the N290 component revealed greater cortical activation in the right fusiform face area in response to fearful faces. This effect started to emerge at 5 months and became well established at 7 months, but it disappeared at 12 months. The P400 and Nc components were primarily localized to the PCC/Precuneus where heightened responses to angry faces were observed. The current results suggest the detection of a fearful face in infants' brain can happen shortly (~200-290 ms) after the stimulus onset, and this process may rely on the face network and develop substantially between 5 to 7 months of age. The current findings also suggest the differential processing of angry faces occurred later in the P400/Nc time window, which recruits the PCC/Precuneus and is associated with the allocation of infants' attention.