This study investigated the behavioral and neural indices of detecting facial familiarity and facial emotions in human faces by dogs. Awake canine fMRI was used to evaluate dogs’ neural response to pictures and videos of familiar and unfamiliar human faces, which contained positive, neutral, and negative emotional expressions. The dog–human relationship was behaviorally characterized out-of-scanner using an unsolvable task. The caudate, hippocampus, and amygdala, mainly implicated in reward, familiarity and emotion processing, respectively, were activated in dogs when viewing familiar and emotionally salient human faces. Further, the magnitude of activation in these regions correlated with the duration for which dogs showed human-oriented behavior towards a familiar (as opposed to unfamiliar) person in the unsolvable task. These findings provide a bio-behavioral basis for the underlying markers and functions of human–dog interaction as they relate to familiarity and emotion in human faces.