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This study set out to examine the valence effect on the explicit and implicit processing of Chinese emotion-label and emotion-laden words with emotional categorisation task (ECT) and emotional Stroop task (EST). Behaviourally, the dissociation between emotion-label and emotion-laden words was only observed in the ECT and was modulated by valence. Neurophysiologically, a negative bias was found in the early perceptual processing stage (N170). In the second processing stage, the dissociation between emotion-label and emotion-laden words was modulated by valence (P2 and EPN). In the elaborate processing stage, the neural dissociation between emotion-label and emotion-laden words was modulated by the processing level (frontal N400 and early LPC). Valence interacted with processing level (late LPC). This study verifies the three-stage model of emotional word processing and extends it by adding two factors—processing level and emotional word type—into the model. [ABSTRACT FROM AUTHOR]