Purpose - The purpose of this paper is to investigate the effect of employee-displayed smiling on customers' affective states (pleasure, arousal, and dominance) and satisfaction. Building on the stimulus-organism-response framework and theories of emotional contagion and feelings-as-information, the main hypothesis was that a smiling (vs non-smiling) employee significantly increases customer satisfaction through the mediating influence of pleasure. Design/methodology/approach - The study used a quasi-experimental two-group between-subjects design. A total of 210 customers at a large retail bank had a brief service encounter at the store entrance with a smiling (vs non-smiling) bank teller. Customers then went into the bank to do what they came to do. Before leaving the bank, customers completed a survey that included demographic information, affect (pleasure, arousal, and dominance), and measures of customer satisfaction. Findings - A smiling (vs non-smiling) employee had a significant positive impact on customer satisfaction. This effect was mediated by pleasure, but also, to a weaker extent, by dominance. These results contradict previous claims that smiling-induced emotional contagion does not remain throughout the completion of a service encounter. Practical implications - Managers should encourage, and potentially train, employees to act in ways associated with positive emotions. Managers could also hire employees based on how good they are at acting and expressing themselves in a genuinely positive manner and create a pleasant store atmosphere so that the feelings and behaviors displayed by frontline employees are genuine rather than inauthentic. Originality/value - This is the first experimental field study to examine the isolated effect that employee-displayed smiling has on customers' affective states and satisfaction. The results provide more direct evidence for the psychological processes justified by emotional contagion and feelings-as-information theories. Furthermore, the finding that dominance mediates the smiling-satisfaction link has never been shown before.