An explication of the neural substrates for social perception is an important component in the emerging field of social cognitive neuroscience and is relevant to the field of cognitive neuroscience as a whole. Prior studies from our laboratory have demonstrated that passive viewing of biological motion (Pelphrey, Mitchell, et al., 2003; Puce et al., 1998) activates the posterior superior temporal sulcus (STS) region. Furthermore, recent evidence has shown that the perceived context of observed gaze shifts (Pelphrey, Singerman, et al., 2003; Pelphrey et al., 2004) modulates STS activity. Here, using event-related functional magnetic resonance imaging at 4 T, we investigated brain activity in response to passive viewing of goal- and non-goal- directed reaching-to-grasp movements. Participants viewed an animated character making reaching-to-grasp movements either toward (correct) or away (incorrect) from a blinking dial. Both conditions evoked significant posterior STS activity that was strongly right lateralized. By examining the time course of the blood oxygenation level-dependent response from areas of activation, we observed a functional dissociation. Incorrect trials evoked significantly greater activity in the STS than did correct trials, while an area posterior and inferior to the STS (likely corresponding to the MT/V5 complex) responded equally to correct and incorrect movements. Parietal cortical regions, including the superior parietal lobule and the anterior intraparietal sulcus, also responded equally to correct and incorrect movements, but showed evidence for differential responding based on the hand and arm (left or right) of the animated character used to make the reaching-to-grasp movement. The results of this study further suggest that a region of the right posterior STS is involved in analyzing the intentions of other people's actions and that activity in this region is sensitive to the context of observed biological motions.