Tool use leads to plastic changes in sensorimotor body representations underlying tactile perception. The neural correlates of this tool-induced plasticity in humans have not been adequately characterized. This study used ERPs to investigate the stage of sensory processing modulated by tool use. Somatosensory evoked potentials, elicited by median nerve stimulation, were recorded before and after two forms of object interaction: tool use and hand use. Compared with baseline, tool use—but not use of the hand alone—modulated the amplitude of the P100. The P100 is a mid-latency component that indexes the construction of multisensory models of the body and has generators in secondary somatosensory and posterior parietal cortices. These results mark one of the first demonstrations of the neural correlates of tool-induced plasticity in humans and suggest that tool use modulates relatively late stages of somatosensory processing outside primary somatosensory cortex. This finding is consistent with what has been observed in tool-trained monkeys and suggests that the mechanisms underlying tool-induced plasticity have been preserved across primate evolution.