The recurrent nature of Major Depressive Disorder (MDD) necessitates a better understanding of mechanisms facilitating relapse. MDD has often been associated with abnormal emotion regulation, underpinned by aberrant interactions between the prefrontal cortex and subcortical areas. We assessed whether neural regulation abnormalities remain after remission and relate to emotion regulation problems in daily life. At the baseline measurement of a randomized controlled trial, an emotion regulation task was performed during fMRI scanning by 46 remitted recurrent (rrMDD) patients and 24 healthy controls. We assessed both fMRI peak activity and the temporal dynamics of the neural response during passive attendance and explicit regulation of positive and negative emotions. Furthermore, we assessed regulation strategy use in daily life using questionnaires, and attentional biases using a modified attentional dot-probe task. RrMDD patients showed lower activation and different temporal dynamics in occipital, parietal, and prefrontal brain regions during passive attendance of emotional material compared to healthy controls. During explicit downregulation of negative emotions, no group differences were found. However, during explicit upregulation of positive emotions, rrMDD patients showed a different neural response over time in the insula. Behaviourally, rrMDD patients were characterized by dysfunctional regulation strategies in daily life. Within rrMDD patients, rumination was associated with activation within a limbic- prefrontal network. After remission, immediate emotional processing seems unaffected, but regulatory abnormalities remain, especially uninstructed and in daily life. Abnormal insula activation during positive upregulation suggests decreased monitoring of positive emotions. The relation between inadequate rumination and brain activity during emotion regulation suggests that regulation of both positive and negative affect is important in understanding neurocognitive underpinnings of resilience.