This study investigated chronotype and time of day effects on lexical and facial emotion processing tasks and explored relationships with sleep quality and mental health outcomes. Participants were 351 Taiwanese adolescents (204 males) aged 13 to 16 years of age who completed both a Facial-Emotional Stroop and a Lexical-Emotional Stroop task at 08:00–10:00 am or at 14:00–16:00 pm. Chronotype was measured using the Morningness-Eveningness Questionnaire (MEQ) and grouped into Morning (n = 46), Intermediate (n = 248) or Evening types (n = 57). Participants completed validated measures of sleep quality (PSQI) and mental health difficulties (DASS-21). The study observed independent effects of time of day and chronotype on the Facial-Emotional Stroop task. Independent of chronotype group, delayed reaction times to anger stimuli were observed in adolescents tested in the morning. Younger adolescents with an Evening chronotype showed delayed responses to anger faces independent of the time of testing. Facial-Emotional Stroop task performance correlated with reported sleep quality and mental health only in Evening chronotypes, with attenuated responses to anger versus neutral stimuli associated with poorer sleep quality and worse mental health outcomes. An exploratory simple mediation analysis indicated that the relationship between attenuated responses to anger and greater mental health difficulties was fully mediated by poorer sleep quality. This study provides evidence of diurnal and chronotype-related variation in facial threat-related processing in typical adolescent development. It also indicates how social emotional processing is vulnerable to sleep disruptions and is linked to the greater mental health problems observed in adolescents with an eveningness profile.