Previous research has demonstrated that loss of sleep has a negative impact on both emotional and cognitive functioning. We examined whether subjectively reported natural sleep loss is associated with the interplay between emotion and cognition, as was probed by brain activity in response to emotional distraction during a working memory task. Forty-six healthy male adults reported their typical weekly sleep pattern using the Munich Chronotype Questionnaire (MCTQ), while recent sleep loss was enquired using a sleep diary in the 7 days preceding scanning. Participants performed a delayed match-to-sample task with negative and neutral distracters during the delay period inside the MRI scanner. Activity differences between negative and neutral distracters were associated to both sleep loss measures across participants. The amount of typically encountered sleep loss indicated by the MCTQ, but not sleep diary, was negatively associated with activity in the rostral anterior cingulate cortex and dorsomedial prefrontal cortex during emotionally negative compared to neutral distraction (p < 0.025, whole brain corrected). Participants showed less distracter-related activity in the ACC and dorsomedial PFC with increasing sleep loss, which, in the long run, might contribute to less adaptive emotional processing, and therefore a greater vulnerability to develop affective disorders.