Overnight REM sleep physiology and retrieval-related brain activity in limbic and neocortical structures have been independently linked to emotional memory retention. Few studies, however, have explored the interaction between these processes for emotional memory retention, especially across short periods of daytime sleep. Here, we investigated the interaction between nap physiology and retrieval-related functional brain activity on retention of emotional and neutral content. 35 healthy, good sleeping young adult participants (aged 25 ± 5 years) viewed and rated the emotional intensity of multi-sensory emotional and neutral stimuli during 3T functional magnetic resonance imaging (fMRI). Participants then took a short nap monitored with polysomnography. Following the nap, participants performed a cued recall task including memory vividness ratings during fMRI scanning. Memory retrieval success and vividness was similar across emotional and neutral stimuli, though stimuli that were later remembered were rated as more emotionally intense at encoding than stimuli that were later forgotten. REM% interacted with memory-related activity in inferior and middle temporal cortex. These findings suggest that perceived emotional intensity during encoding predicts subsequent recall. Further, REM sleep may attenuate memory-related engagement of visual processing regions previously implicated in negative emotional memory reinstatement.