The ability to perceive the emotional states of others, termed emotion recognition, allows individuals to adapt their conduct to the social environment. The brain mechanisms underlying this capacity, known to be impaired in individuals with autism spectrum disorder (ASD), remain, however, elusive. Here, we show that adult mice can discern between emotional states of conspecifics. Fiber photometry recordings of calcium signals in the prelimbic (PrL) medial prefrontal cortex revealed inhibition of pyramidal neurons during investigation of emotionally aroused individuals, as opposed to transient excitation toward naive conspecifics. Chronic electrophysiological recordings at the single-cell level indicated social stimulus-specific responses in PrL neurons at the onset and conclusion of social investigation bouts, potentially regulating the initiation and termination of social interactions. Finally, optogenetic augmentation of the differential neuronal response enhanced emotion recognition, while its reduction eliminated such behavior. Thus, differential PrL neuronal response to individuals with distinct emotional states underlies murine emotion recognition.