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Exposure to peer victimization is a traumatic stressor, with adverse consequences for mental and physical health. This prospective, multi‐method, multi‐informant study investigated how victimization "gets into the brain," as reflected in neural dysregulation of emotion during adolescence. Moreover, we examined whether certain youth are particularly vulnerable to compromised neural function (i.e., a pattern of positive amygdala‐right ventrolateral prefrontal cortex [rVLPFC] connectivity linked to poor emotion regulation [ER] and emotional distress) following victimization. In all, 43 adolescent girls completed an implicit ER task during a functional brain scan, and reported on rejection sensitivity. In 6th–9th grades, teachers and adolescents reported annually on victimization. Results revealed that a history of elevated victimization predicted less effective neural regulation of emotion (more positive amygdala‐rVLPFC connectivity) in girls with high but not low rejection sensitivity. Consistent with a differential susceptibility model, high rejection sensitivity was associated with particularly effective neural regulation of emotion (more negative amygdala‐rVLPFC connectivity) in girls with low‐victimization histories. A parallel pattern emerged for a behavioral index of ER. This research provides insight into one pathway through which peer adversity undermines emotional development in ways that forecast compromised future health, and identifies youth who are at particularly high risk following peer adversity. [ABSTRACT FROM AUTHOR]