While the extant literature has focused on major depressive disorder (MDD) as being characterized by abnormalities in processing affective stimuli (e.g., facial expressions), little is known regarding which specific aspects of cognition influence the evaluation of affective stimuli, and what are the underlying neural correlates. To investigate these issues, we assessed 26 adolescents diagnosed with MDD and 37 well-matched healthy controls (HCL) who completed an emotion identification task of dynamically morphing faces during functional magnetic resonance imaging (fMRI). We analyzed the behavioral data using a sequential sampling model of response time (RT) commonly used to elucidate aspects of cognition in binary perceptual decision making tasks: the Linear Ballistic Accumulator (LBA) model. Using a hierarchical Bayesian estimation method, we obtained group-level and individual-level estimates of LBA parameters on the facial emotion identification task. While the MDD and HCL groups did not differ in mean RT, accuracy, or group-level estimates of perceptual processing efficiency (i.e., drift rate parameter of the LBA), the MDD group showed significantly reduced responses in left fusiform gyrus compared to the HCL group during the facial emotion identification task. Furthermore, within the MDD group, fMRI signal in the left fusiform gyrus during affective face processing was significantly associated with greater individual-level estimates of perceptual processing efficiency. Our results therefore suggest that affective processing biases in adolescents with MDD are characterized by greater perceptual processing efficiency of affective visual information in sensory brain regions responsible for the early processing of visual information. The theoretical, methodological, and clinical implications of our results are discussed.