Internal monitoring or state estimation of movements is essential for human motor control to compensate for inherent delays and noise in sensorimotor loops. Two types of internal estimation of movements exist: self-generated movements, and externally generated movements. We used functional magnetic resonance imaging to investigate differences in brain activity for internal monitoring of self- versus externally generated movements during visual occlusion. Participants tracked a sinusoidally moving target with a mouse cursor. On some trials, vision of either target (externally generated) or cursor (self-generated) movement was transiently occluded, during which subjects continued tracking by estimating current position of either the invisible target or cursor on screen. Analysis revealed that both occlusion conditions were associated with increased activity in the presupplementary motor area and decreased activity in the right lateral occipital cortex compared to a control condition with no occlusion. Moreover, the right and left posterior parietal cortex (PPC) showed greater activation during occlusion of target and cursor movements, respectively. This study suggests lateralization of the PPC for internal monitoring of internally versus externally generated movements, fully consistent with previously reported clinical findings.