Deep brain stimulation is effective for patients with treatment-refractory obsessive-compulsive disorder. Deep brain stimulation of the ventral anterior limb of the internal capsule rapidly improves mood and anxiety with optimal stimulation parameters. To understand these rapid effects, we studied functional interactions within the affective amygdala circuit. We compared resting state functional MRI data during chronic stimulation versus 1 week of stimulation discontinuation in patients, and obtained two resting state scans from matched healthy volunteers to account for test-retest effects. Imaging data were analysed using functional connectivity analysis and dynamic causal modelling. Improvement in mood and anxiety following deep brain stimulation was associated with reduced amygdala-insula functional connectivity. Directional connectivity analysis revealed that deep brain stimulation increased the impact of the ventromedial prefrontal cortex on the amygdala, and decreased the impact of the amygdala on the insula. These results highlight the importance of the amygdala circuit in the pathophysiology of obsessive-compulsive disorder, and suggest a neural systems model through which negative mood and anxiety are modulated by stimulation of the ventral anterior limb of the internal capsule for obsessive-compulsive disorder and possibly other psychiatric disorders.