This dissertation attempts to understand the nature of and role that customers' embarrassment and guilt play in service encounters and evaluations. In Essay 1, I study the commonalities between and distinctiveness of each of these emotions, by identifying their antecedents and testing customers’ perceptions of these emotions as unique emotional states. This dissertation also represents the first exploratory effort to understand how service employees and service organizations can help customers to deal with their embarrassment and guilt, and transform an uncomfortable situation into a positive service experience. In Essay 2, this dissertation tests how consumers' self-attributed service failures (one of the customers' guilt and embarrassment antecedents), influence their satisfaction and likelihood of spreading positive word-of-mouth. I also examine embarrassment and guilt as mediators of the relationship between customers' self-blame and service outcomes. This dissertation provides evidence than both embarrassment and guilt are emotions commonly experienced by consumers in service encounters. Individuals can differentiate them and provide different narratives aligned to the theoretical description of each emotion. Furthermore, consumers believe service employees' actions can worsen or lessen the discomfort typical of embarrassing or guilt-evoking situations. Finally, this dissertation demonstrates that the embarrassment and guilt generated by customers' self-attributed service failures impact service outcomes, and demonstrates how the presence of other customers as well the customers' behavioral inconsistency, can moderate these effects.