Emotional experience involves an integrated interplay between processing of external emotional cues and interoceptive feedback, and this is impaired in a number of emotional disorders. The neuropeptide oxytocin (OT) enhances the salience of external social cues but its influence on interoception is unknown. The present pharmaco-fMRI study therefore investigated whether OT enhances interoceptive awareness and if it influences the interplay between interoceptive and salience processing. In a randomized, double-blind, between-subject, design study 83 subjects received either intranasal OT or placebo. In Experiment 1, subjects performed a heartbeat detection task alone, while in Experiment 2 they did so while viewing both neutral and emotional face stimuli. Interoceptive accuracy and neural responses in interoceptive and salience networks were measured. In Experiment 1, OT had no significant influence on interoceptive accuracy or associated activity in the right anterior insula (AI) and dorsal anterior cingulate cortex. However, in Experiment 2 when face stimuli were also presented, OT decreased interoceptive accuracy and increased right AI activation and its functional connectivity with the left posterior insula (PI), with the latter both being negatively correlated with accuracy scores. The present study provides the first evidence that while OT does not influence processing of interoceptive cues per se it may switch attention away from them towards external salient social cues by enhancing right AI responses and its control over the PI. Thus OT may help regulate the interplay between interoceptive and external salience processing within the insula and could be of potential therapeutic benefit for emotional disorders.