The neuropeptide oxytocin (OXT) is thought to attenuate anxiety by dampening amygdala reactivity to threat in individuals with generalized social anxiety disorder (GSAD). Because the brain is organized into networks of interconnected areas, it is likely that OXT impacts functional coupling between the amygdala and other socio-emotional areas of the brain. Therefore, the aim of the current study was to examine the effects of OXT on amygdala functional connectivity during the processing of fearful faces in GSAD subjects and healthy controls (HCs). In a randomized, double-blind, placebo (PBO)-controlled, within-subjects design, 18 HCs and 17 GSAD subjects performed a functional magnetic resonance imaging task designed to probe amygdala response to fearful faces following acute intranasal administration of PBO or OXT. Functional connectivity between the amygdala and the rest of the brain was compared between OXT and PBO sessions using generalized psychophysiological interaction analyses. Results indicated that within individuals with GSAD, but not HCs, OXT enhanced functional connectivity between the amygdala and the bilateral insula and middle cingulate/dorsal anterior cingulate gyrus during the processing of fearful faces. These findings suggest that OXT may have broad pro-social implications such as enhancing the integration and modulation of social responses.