Social Phobia (SP) is a marked and persistent fear of social or performance situations in which the person is exposed to unfamiliar people or to possible scrutiny by others. Faces of others are perceived as threatening by social phobic patients (SPP). To investigate how face processing is altered in the distributed neural system for face perception in Social Phobia, we designed an event-related fMRI study in which Healthy Controls (HC) and SPP were presented with angry, fearful, disgusted, happy and neutral faces and scrambled pictures (visual baseline). As compared to HC, SPP showed increased neural activity not only in regions involved in emotional processing including left amygdala and insula, as expected from previous reports, but also in the bilateral superior temporal sulcus (STS), a part of the core system for face perception that is involved in the evaluation of expression and personal traits. In addition SPP showed a significantly weaker activation in the left fusiform gyrus, left dorsolateral prefrontal cortex, and bilateral intraparietal sulcus as compared to HC. These effects were found not only in response to emotional faces but also to neutral faces as compared to scrambled pictures. Thus, SPP showed enhanced activity in brain areas related to processing of information about emotional expression and personality traits. In contrast, brain activity was decreased in areas for attention and for processing other information from the face, perhaps as a result of a feeling of wariness. These results indicate a differential modulation of neural activity throughout the different parts of the distributed neural system for face perception in SPP as compared to HC.