When pure tones of different frequencies are presented dichotically, participants report a subjective beat at a frequency of the difference between the 2 tones. These binaural beats are illusory in that they do not exist in the physical stimuli. Electro-and magnetoencephalographic evidence suggests that these psychological binaural beats can induce physiological synchronous electric activity in the brain. Therefore, they have potential experimental and therapeutic applications. The present study reports on a fully controlled, double-blind experiment of acute exposure to binaural beats at 6 Hz (theta) on concurrent mood and cognitive function as measured by a range of fluency tasks on healthy adults. The present study could not find any detectable influence of binaural beat exposure on four different measures of cognitive fluency (phonological, semantic, ideational and design). However, regarding moods measured with the Visual Analogue Mood Scales, a significant induction of fear in the binaural beat condition compared to control was detected. A suggested mechanism of action for this fear induction is the entrainment of theta activity in the amygdala or primary auditory cortex. Furthermore, as the beat was embedded within music, participants were unaware of its presence. The present data suggest that no cognitive enhancement, nor for that matter cognitive suppression, at least as measured by fluency tasks, is induced by theta frequency binaural beat stimulation. However, the fact that theta frequency stimulation can induce fear without participants being aware of the stimulation could be of practical experimental use, for example in human anxiety or conditioned fear research.