Dysfunctions in fronto-amygdala circuitry have been linked to anxiety. Questions remain regarding the impact of familial-risk and ongoing anxiety on such circuitry function, especially in youth. Using fMRI fear conditioning and extinction paradigms, we examined these relationships in 10-17 year-olds: 22 youth with an anxiety disorder, 22 healthy youth born to parents with past or current anxiety disorders (at risk), and 32 healthy comparisons. Skin conductance responses and subjective fear ratings were also assessed. During conditioning, healthy comparisons showed differential activation (CS + >CS-) in regions of the fronto-amygdala circuitry. In comparison, the at-risk group showed greater activation to the safety cue (CS - >CS+) in the amygdala and dorsolateral prefrontal cortex. Failure to show differential fear conditioning in the fronto-amygdala circuitry and impairment in extinction learning was specific to anxious youth. These findings expand our ability to track anxiety-related alterations and potential resilience markers to anxiety.