•Service recovery awareness of frontline employees has the double-edged sword effect on post-recovery satisfaction of customers in service recovery.•SRA is appraised as a challenging demand that is positively associated with post-recovery satisfaction through work engagement.•SRA is considered a hindrance demand that leads to emotional exhaustion, which is negatively related to post-recovery satisfaction.•Perceived psychological empowerment (PPE) amplified the impact of SRA on work engagement.•PPE buffered the impact of SRA on emotional exhaustion. Drawing on job demands-resources (JD-R) theory, this study examines the double-edged sword effect of service recovery awareness (SRA) on post-recovery satisfaction via frontline employees’ (FLEs) emotional responses (including emotional exhaustion and work engagement). The moderating effect of perceived psychological empowerment (PPE) was also assessed. Dyadic and matched responses from 267 five-star hotel FLEs and customers indicated that SRA is appraised as a challenging demand that is positively associated with post-recovery satisfaction through work engagement. However, SRA is also considered a hindrance demand that leads to emotional exhaustion, which is negatively related to post-recovery satisfaction. PPE amplified the impact of SRA on work engagement and buffered the impact of SRA on emotional exhaustion. The theoretical contribution, managerial implications, and suggestions for future research of this study are discussed in detail.