Multiple theoretical perspectives posit that drug use leads to biased valuation of drug-related reward, at the expense of naturally occurring rewarding activities (i.e., reward dysregulation). Recent research suggests that the comparative balance of drug-related and nondrug-related reward valuation is a powerful determinant of substance misuse and addiction. We examined differential neurophysiological responses—indexed with the P3 component of the event-related potential (ERP)—elicited by visual alcohol cues and cues depicting natural reward as a neurobiological indicator of problematic drinking. Nondependent, young adult drinkers (N = 143, aged 18–30 years) completed questionnaire measures assessing alcohol use and problems, and viewed alcohol cues (pictures of alcoholic beverages), high-arousing natural reward cues (erotica, adventure scenes), nonalcoholic beverage cues, and neutral scenes (e.g., household items) while ERPs were recorded. When examined separately, associations of P3-ERP reactivity to alcohol cues and natural reward cues with alcohol use and problems were weak. However, differential P3 response to the two types of cues (i.e., reward dysregulation P3) showed consistent and robust associations with all indices of alcohol use and problems and differentiated high-risk from lower-risk drinkers. The current results support the idea that the differential incentive-motivational value of alcohol, relative to naturally rewarding activities, is associated with increased risk for substance misuse and dependence, and highlight a novel neurophysiological indicator—the reward dysregulation P3—of this differential reward valuation.