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Identifying another's mistakes requires a basic representation of other's action patterns as well as recognition and understanding of their failed goal-attainment. In previous work, we identified several regions, including inferior parietal cortex and rostral/ventral anterior cinguli (r/vACC), that show unique sensitivity to the observation of another's errors. Here we utilize the same sample to show that participants’ level of self-reported perspective-taking (but not empathic concern) correlated with hemodynamic response in IPC, while participants’ level of self-reported empathic concern (but not perspective taking) correlated with hemodynamic response in r/vACC. This functional dissociation provides strong evidence for separate roles for IPC and r/vACC in the processing of observed errors. IPC may foster a sense of agency by distinguishing self- from other-performed actions; r/vACC may, in turn, promote a more contextually-mediated understanding of the other's failed goal-attainment.