While aging is associated with social-cognitive change and oxytocin plays a crucial role in social cognition, oxytocin’s effects on the social brain in older age remain understudied. To date, no study has examined the effects of chronic intranasal oxytocin administration on brain mechanisms underlying animacy perception in older adults. Using a placebo-controlled, randomized, double-blinded design in generally healthy older men (mean age (SD) = 69(6); n = 17 oxytocin; n = 14 placebo), this study determined the effects of a four-week intranasal oxytocin administration (24 international units/twice a day) on functional MRI (fMRI) during the Heider-Simmel task. This passive-viewing animacy perception paradigm contains video-clips of simple shapes suggesting social interactions (SOCIAL condition) or exhibiting random trajectories (RANDOM condition). While there were no oxytocin-specific effects on brain fMRI activation during the SOCIAL compared to the RANDOM condition, pre-to-post intervention change in the SOCIAL-RANDOM difference in functional connectivity (FC) was higher in the oxytocin compared to the placebo group in a network covering occipital, temporal, and parietal areas, and the superior temporal sulcus, a key structure in animacy perception. These findings suggest oxytocin modulation of circuits involved in action observation and social perception. Follow-up analyses on this network’s connections suggested a pre-to-post intervention decrease in the SOCIAL-RANDOM difference in FC among the placebo group, possibly reflecting habituation to repeated exposure to social cues. Chronic oxytocin appeared to counter this process by decreasing FC during the RANDOM and increasing it during the SOCIAL condition. This study advances knowledge about oxytocin intervention mechanisms in the social brain of older adults.