Individuals with chronic insomnia have trouble falling or staying asleep, wake up earlier than desired, and have daytime complaints. Some individuals also have difficulty regulating their emotions, especially in response to sleep-related stimuli. Cognitive-behavioural therapy for insomnia (CBTi), the gold-standard treatment for insomnia, has been shown to improve sleep. But, it is still unclear if CBTi impacts the neural activations underlying emotional reactivity in adults with insomnia and if emotion reactivity plays a role in CBTi treatment response. Thus, the first aim of this study was to investigate brain activity, using functional magnetic resonance imaging, during an emotion reactivity task in adults with insomnia and healthy sleepers. Secondly, we examined the effects of CBTi on brain activity during this emotion task in adults with insomnia. Lastly, we determined if brain activity at baseline was predictive of CBTi treatment response. While no differences in brain activity in response to sleep relative to neutral images were found between adults with insomnia and healthy sleepers at baseline, different patterns of activation in response to negative relative to neutral images were observed. Furthermore, after CBTi, adults with insomnia had reduced activity within the left insula and superior temporal gyrus in response to sleep relative to neutral images. But, there were no changes in affect. Lastly, brain activity in response to sleep relative to neutral images at baseline did not predict improvements in sleep. Overall, these findings contribute to the growing literature about sleep and emotions in adults with insomnia.