Prolonged exposure therapy (PE) is a highly efficacious and effective treatment for posttraumatic stress disorder (PTSD). In addition to reducing PTSD symptoms, PE ameliorates a wide-variety of related symptoms, including anxiety, depression, functional impairment, mild suicidal ideation, and anger. Furthermore, PE is effective in patients with comorbid conditions, including dissociation, substance use, borderline personality disorder and psychosis. How does PE achieve these outcomes? Emotional processing theory (EPT) is the conceptual model from which PE was derived. Three key concepts were originally proposed as indicators that emotional processing, the mechanism underlying symptom reduction via exposure therapy, including PE, had occurred. The three indicators are fear activation, within-session habituation, and between-session habituation, all of which were proposed to reduce symptoms of PTSD. In addition to these indicators, EPT posits that changes in cognitive evaluations about the self and the world are also involved in successful emotional processing, the mechanism underlying symptom reduction. Since its emergence in 1986, EPT has been updated and modified to incorporate emerging empirical findings and conceptual developments. We first review recent empirical support for, and refutation of, various hypotheses derived from EPT, including the importance of fear activation, between-session habituation, and cognitive change. We then provide a clinical case study to highlight strategies to promote emotional processing and the resultant long-term symptom reduction. This case example highlights three common obstacles to success in PE: namely underengagement, insufficient homework compliance, and the presence of PTSD-related negative cognitions. (PsycINFO Database Record (c) 2019 APA, all rights reserved)