Goal-directed action in changing environments requires a dynamic balance between complementary control modes, which serve antagonistic adaptive functions (e.g., to shield goals from competing responses and distracting information vs. to flexibly switch between goals and behavioral dispositions in response to significant changes). Too rigid goal shielding promotes stability but incurs a cost in terms of perseveration and reduced flexibility, whereas too weak goal shielding promotes flexibility but incurs a cost in terms of increased distractibility. While research on cognitive control has long been conducted relatively independently from the study of emotion and motivation, it is becoming increasingly clear that positive affect and reward play a central role in modulating cognitive control. In particular, evidence from the past decade suggests that positive affect not only influences the contents of cognitive processes, but also modulates the balance between complementary modes of cognitive control. In this article we review studies from the past decade that examined effects of induced positive affect on the balance between cognitive stability and flexibility with a focus on set switching and working memory maintenance and updating. Moreover, we review recent evidence indicating that task-irrelevant positive affect and performance-contingent rewards exert different and sometimes opposite effects on cognitive control modes, suggesting dissociations between emotional and motivational effects of positive affect. Finally, we critically review evidence for the popular hypothesis that effects of positive affect may be mediated by dopaminergic modulations of neural processing in prefrontal and striatal brain circuits, and we refine this “dopamine hypothesis of positive affect” by specifying distinct mechanisms by which dopamine may mediate effects of positive affect and reward on cognitive control. We conclude with a discussion of limitations of current research, point to central unresolved questions and outline perspective for future research on affective and motivational modulations of cognitive control modes.