The two-factor theory of emotion, proposed by Schachter and Singer, holds that emotion arises from the combination of physiological arousal and a cognitive label applied to that arousal. Both components are necessary.

According to the theory, undifferentiated arousal is interpreted in light of the surrounding context. The same elevated heart rate may be experienced as fear in a threatening situation or as excitement in a celebratory one. Classic experiments attempted to manipulate arousal with injections of adrenaline and to vary the available cognitive labels through the behavior of confederates. Results were mixed, yet the core idea—that cognition shapes the quality of emotional experience—has remained influential.

The theory helped move the field beyond purely physiological or purely cognitive accounts. Later research has refined the relative contributions of arousal and appraisal and has shown that some emotional responses can occur with minimal conscious labeling. Nonetheless, the insight that the meaning assigned to bodily change helps determine the felt emotion continues to guide theory and research.

Arousal supplies the intensity; the label supplies the identity of the emotion.