Heightened state anxiety can have a deleterious impact on memory for faces. In this paper we investigated whether anxiety: (i) moderates the own-ethnicity bias (OEB) and (ii) impairs face recognition accuracy at the encoding or retrieval phase of an OEB face-recognition task. Using a typical OEB task, anxiety was induced during encoding and retrieval in Experiment 1, but only during retrieval in Experiment 2. An OEB was found in both experiments, but anxiety did not moderate the OEB in either experiment. In Experiment 1, anxious participants were poorer at face recognition for both own-and other-ethnicity faces. In Experiment 2 anxiety did not impair face recognition. Together, these studies suggest that anxiety impaired participants' encoding, but not retrieval, of faces. The implications of these findings are discussed.