Theories of Environmental Sensitivity predict that there is inter-individual variation in the degree of processing and responding to the surrounding environment, which can explain individual differences observed in psychological outcomes. Sensory-Processing Sensitivity (SPS) describes a personality trait, which is thought to reflect heightened environmental sensitivity (i.e., increased processing and responding to the environment). The evidence in this thesis supports this claim, as SPS was found to moderate the effect of life experiences on different psychological outcomes. High SPS reflected a risk factor for high levels of depression and low levels of wellbeing, which was related to increased responsivity to retrospective negative childhood experiences (in adults), as well as increased responsivity to concurrent negative life events (in adolescents). It also found that high SPS individuals showed attenuated responsivity to positive childhood experiences (in adults), although no moderation of positive life events was observed in adolescents. Together, these studies show that high SPS reflects heightened environmental sensitivity, within a diathesis-stress context, as it reflects increased psychopathology, in combination with environmental stress. Further, emotion regulation was found to be an important mediating factor, highlighting a potential treatment target for future mental health interventions, designed for high SPS individuals. Cognitive mechanisms, which support increased processing and responding to the environment, were also investigated within the context of SPS and different contextual learning tasks. However, no associations were observed between SPS and (i) statistical learning, (ii) global-local attentional processing biases, nor (iii) differences in reinforcement learning. Future research may benefit from undertaking neural measurements, such as by electroencephalogram (EEG), in order to assess cognitive mechanisms more directly.