Background: Distorted images of the observable self are considered crucial in the development and maintenance of social anxiety. We generated an experimental situation in which participants viewed themselves from an observer's perspective when exposed to scrutiny and evaluation by others. Method: Twenty patients with social anxiety disorder (SAD) and 20 control subjects were assessed using functional magnetic resonance imaging (fMRI) during the public exposure of pre-recorded videos in which they were each shown performing a verbal task. The examiners acted as the audience in the experiment and rated performance. Whole-brain functional maps were computed using Statistical Parametric Mapping. Results: Robust activation was observed in regions related to self-face recognition, emotional response and general arousal in both study groups. Patients showed significantly greater activation only in the primary visual cortex. By contrast, they showed significant deactivation or smaller activation in dorsal frontoparietal and anterior cingulate cortices relevant to the cognitive control of negative emotion. Task-related anxiety ratings revealed a pattern of negative correlation with activation in this frontoparietal/cingulate network. Importantly, the relationship between social anxiety scores and neural response showed an inverted-U function with positive correlations in the lower score range and negative correlations in the higher range. Conclusions: Our findings suggest that exposure to scrutiny and evaluation in SAD may be associated with changes in cortical systems mediating the cognitive components of anxiety. Disorder severity seems to be relevant in shaping the neural response pattern, which is distinctively characterized by a reduced cortical response in the most severe cases.