Impairments in using eye gaze to establish joint attention and to comprehend the mental states and intentions of other people are striking features of autism. Here, using event-related functional MRI (fMRI), we show that in autism, brain regions involved in gaze processing, including the superior temporal sulcus (STS) region, are not sensitive to intentions conveyed by observed gaze shifts. On congruent trials, subjects watched as a virtual actor looked towards a checkerboard that appeared in her visual field, confirming the subject's expectation regarding what the actor 'ought to do' in this context. On incongruent trials, she looked towards empty space, violating the subject's expectation. Consistent with a prior report from our laboratory that used this task in neurologically normal subjects, 'errors' (incongruent trials) evoked more activity in the STS and other brain regions linked to social cognition, indicating a strong effect of intention in typically developing subjects (n = 9). The same brain regions were activated during observation of gaze shifts in subjects with autism (n = 10), but did not differentiate congruent and incongruent trials, indicating that activity in these regions was not modulated by the context of the perceived gaze shift. These results demonstrate a difference in the response of brain regions underlying eye gaze processing in autism. We conclude that lack of modulation of the STS region by gaze shifts that convey different intentions contributes to the eye gaze processing deficits associated with autism.