The neuropeptide vasopressin is a modulator of mammalian social behavior and emotion, particularly fear, aggression, and anxiety. In humans, the neural circuitry underlying behavioral effects of vasopressin is unknown. Using a double-blind crossover administration of 40 IU of vasopressin or placebo and functional MRI during processing of facial emotions in healthy male volunteers, we show that vasopressin specifically reduces differential activation in the subgenual cingulate cortex. Structural equation modeling of a previously evaluated circuit between amygdala, subgenual cingulate, and supragenual cingulate revealed altered effective connectivity between subgenual and supragenual cingulate under vasopressin. Our data demonstrate an impact of vasopressin on activity and connectivity in the cortical component of a medial prefrontal cortex-amygdala circuit implicated in emotional regulation, providing the first data on the neural basis for the effects of vasopressin on social behavior in humans with potential therapeutic significance for mood and anxiety disorders.