The neuropeptide oxytocin has recently been shown to enhance eye gaze and emotion recognition in healthy men. Here, we report a randomized double-blind, placebo-controlled trial that examined the neural and behavioral effects of a single dose of intranasal oxytocin on emotion recognition in individuals with Asperger syndrome (AS), a clinical condition characterized by impaired eye gaze and facial emotion recognition. Using functional magnetic resonance imaging, we examined whether oxytocin would enhance emotion recognition from facial sections of the eye vs the mouth region and modulate regional activity in brain areas associated with face perception in both adults with AS, and a neurotypical control group. Intranasal administration of the neuropeptide oxytocin improved performance in a facial emotion recognition task in individuals with AS. This was linked to increased left amygdala reactivity in response to facial stimuli and increased activity in the neural network involved in social cognition. Our data suggest that the amygdala, together with functionally associated cortical areas mediate the positive effect of oxytocin on social cognitive functioning in AS.