There is a conflicting literature on facial emotion processing in autism spectrum disorder (ASD): both typical and atypical performance have been reported, and inconsistencies in the literature may stem from different processes examined (emotion judgment, face perception, fixations) as well as differences in participant populations. Here we conducted a detailed investigation of the ability to discriminate graded emotions shown in morphs of fear-happy faces, in a well-characterized high-functioning sample of participants with ASD and matched controls. Signal detection approaches were used in the analyses, and concurrent high-resolution eye-tracking was collected. Although people with ASD had typical thresholds for categorical fear and confidence judgments, their psychometric specificity to detect emotions across the entire range of intensities was reduced. However, fixation patterns onto the stimuli were typical and could not account for the reduced specificity of emotion judgment. Together, our results argue for a subtle and specific deficit in emotion perception in ASD that, from a signal detection perspective, is best understood as a reduced specificity due to increased noise in central processing of the face stimuli.