Social transmission of fear is not restricted to visual or auditory cues, but extends to the phylogenetically more ancient olfactory domain. Anxious individuals exhibit heightened sensitivity towards chemosensory stress signals in sweat; however, it is still unknown whether endogenous neuromodulators such as the peptide hormone oxytocin (OXT) influence the chemosensory communication of stress. Here, we investigated whether OXT selectively diminishes behavioral and neural responses to social chemosensory stress cues utilizing a randomized, double-blind, placebo (PLC)-controlled, within-subject functional MRI study design. Axillary sweat was obtained from 30 healthy male donors undergoing the Trier Social Stress Test (stress) and bicycle ergometer training (sport). Subsequently, 58 healthy participants (30 females) completed a forced-choice emotional face recognition task with stimuli of varying intensities (neutral to fearful) while they were exposed to both sweat stimuli and a non-social control odor following intranasal OXT or PLC administration, respectively. OXT diminished stress-induced recognition accuracy and response time biases towards fear. On the neural level, OXT reduced stress-evoked responses in the amygdala in both sexes, the anterior cingulate cortex (ACC) in females, and the hippocampus in males. Furthermore, OXT reinstated the functional connectivity between the ACC and the fusiform face area that was disrupted by stress odors under PLC. Our findings reveal a new role for OXT signaling in the modulation of chemosensory communication of stress in humans. Mechanistically, this effect appears to be rooted in a downregulation of stress-induced limbic activations and concomitant strengthening of top-down control descending from the ACC to the fusiform face area.