Single-unit recordings and functional brain imaging studies have shown reduced neural responses to repeated stimuli in the visual cortex. Using MEG, we compared responses evoked by repetitions of neutral faces to those evoked by fearful faces, which were either task relevant (targets) or irrelevant (distracters). Faces evoked a bi-phasic response in extrastriate cortex, peaking at 160-185 ms and at 220-250 ms, with stronger responses to neutral faces at the earlier interval and stronger responses to fearful faces at the later interval. At both latencies, repetitions of neutral and fearful targets resulted in reduced amplitude of the MEG signal. Additionally, we found that the context in which targets were presented affected their processing: fearful distracters increased the responses evoked by both neutral and fearful targets. Our data indicate that valence enhancement and context effects can be detected in extrastriate visual cortex within 250 ms and that these processes likely reflect feedback from other regions.