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Social-anxiety disorder involves a fear of embarrassing oneself in the presence of others. Taijin-kyofusho (TKS), a subtype common in East Asia, additionally includes a fear of embarrassing others. TKS individuals are hypersensitive to others' feelings and worry that their physical or behavioral defects humiliate others. To explore the underlying neurocognitive mechanisms, we compared TKS ratings with questionnaire-based empathic disposition, cognitive flexibility (set-shifting), and empathy-associated brain activity in 23 Japanese adults. During 3-tesla functional MRI, subjects watched video clips of badly singing people who expressed either authentic embarrassment (EMBAR) or hubristic pride (PRIDE). We expected the EMBAR singers to embarrass the viewers via emotion-sharing involving affective empathy (affEMP), and the PRIDE singers to embarrass via perspective-taking involving cognitive empathy (cogEMP). During affEMP (EMBAR > PRIDE), TKS scores correlated positively with dispositional affEMP (personal-distress dimension) and with amygdala activity. During cogEMP (EMBAR < PRIDE), TKS scores correlated negatively with cognitive flexibility and with activity of the posterior superior temporal sulcus/temporoparietal junction (pSTS/TPJ). Intersubject correlation analysis implied stronger involvement of the anterior insula, inferior frontal gyrus, and premotor cortex during affEMP than cogEMP and stronger involvement of the medial prefrontal cortex, posterior cingulate cortex, and pSTS/TPJ during cogEMP than affEMP. During cogEMP, the whole-brain functional connectivity was weaker the higher the TKS scores. The observed imbalance between affEMP and cogEMP, and the disruption of functional brain connectivity, likely deteriorate cognitive processing during embarrassing situations in persons who suffer from other-oriented social anxiety dominated by empathic embarrassment.