People often respond to others’ emotions using verbal acknowledgment (e.g., “You seem upset”). Yet, little is known about the relational benefits and risks of acknowledging others’ emotions in the workplace. We draw upon Costly Signaling Theory to posit how emotional acknowledgment influences interpersonal trust. We hypothesize that emotional acknowledgment acts as a costly signal of the perceiver’s willingness to expend personal resources to meet the needs of the expresser. Across six studies, we found convergent evidence that emotional acknowledgment led to greater perceptions of costliness, and in turn, to higher evaluations of trust. These effects were stronger for negative than positive emotions because acknowledging negative emotions involved a greater perceived cost. Moreover, inaccurate acknowledgment fostered greater trust than not acknowledging when positive emotions were mislabeled as negative, but not when negative emotions were mislabeled as positive. These findings advance theory on key dynamics between emotion and language in work-related relationships.