In particular, they are unable to discern fear or sadness.
This may be due to damage to, or underdevelopment of, a particular part of the brain, known as the amygdala.
A psychopath is someone who is capable of committing violent or antisocial acts, but is frequently without remorse or guilt for them.
Even young children can be diagnosed as having psychopathic tendencies, yet there have been few explanations for their disorders.
Derek Mitchell and James Blair, from the Institute of Cognitive Neuroscience at University College London, looked at both children suspected of having psychopathic tendencies, and diagnosed psychopathic adults.
They showed them film of people whose faces expressed a variety of emotions - fear, happiness, surprise, disgust and anger.
While happiness, surprise, disgust and anger were recognised by the children, they performed less well when asked to identify fear and sadness.
Criminal mind
In a second test, criminals, half of whom were diagnosed psychopaths, were given a similar test. Again, the criminals with psychopathic tendencies had problems recognising fearful faces.
The study's authors suggest this why such individuals often appear to demonstrate little guilt or remorse, and fail to empathise with their victims.
This can make them very hard to rehabilitate.
Derek Mitchell said: "Attempts to treat psychopathy are frequently ineffective - but the more we know about the causes of the condition, the closer we are to finding out how to treat it."
Dr Blair told BBC News Online that the research could potentially be used to assess patients, decide the best form of treatment and monitor how effective that treatment had been.
At present, no drugs have been shown to be effective in treating psychopathy.
Brain damaged patients who have suffered damage to a particular area of the brain called the amygdala due to strokes or viruses also display similar behaviour, and are unable to recognise certain facial expressions.
The research was presented at the British Psychological Society's developmental conference in Bristol.