BACKGROUND AND OBJECTIVES Increasing research underscores low positive emotion (PE) as a vital component of depression risk in adolescence. Theory also suggests that PE contributes to adaptive coping. However, it is unclear whether naturalistic experiences of emotions contribute to long-term depression risk, or whether daily PE levels equip adolescents to cope with later naturalistic stressors, reducing risk for depression. The current study examines whether PE (and negative emotion [NE]) assessed via ecological momentary assessment (EMA) (a) predict prospective increases in depression, and (b) moderate the association between later life stressors and depression. DESIGN Longitudinal study of community-recruited adolescents, with EMA at baseline. METHOD Adolescents (n = 232) completed contextual threat life stress interviews, interview and self-report measures of depression at baseline and 1.5 year follow-up. At baseline, they completed a seven-day EMA of emotion. RESULTS Preregistered analyses showed that daily NE, but not PE, predicted increased depression over time and moderated the association between interpersonal episodic stress and self-reported depression. CONCLUSIONS Results did not support daily PE as a buffer against depressogenic effects of life stress, but point to daily NE as a marker of depression risk.