Social neuroscience has often been criticized for approaching the investigation of the neural processes that enable social interaction and cognition from a passive, detached, third-person perspective, with participants acting as mere observers of others’ behavior and making judgements based on their observations, without involving any real time social interaction. With the emergence of so-called second-person neuroscience, investigators have enriched the field with findings that evince the unique complexity of neural activation patterns in actual, real-time interaction. This line of work suggests that the kind of social cognition that occurs during social interaction is fundamentally different to that unfolding during social observation. However, it remains unclear how the neural correlates of social interaction are to be interpreted. Here, we leverage the active inference framework to shed light on the mechanisms at play during social interaction in second-person neuroscience studies. Specifically, we show how counterfactually rich mutual predictions, real-time bodily adaptation, and policy selection explain activation in the default mode, salience, and frontoparietal networks of the brain, as well as in the basal ganglia. We further argue that these processes constitute the crucial neural processes that underwrite bona fide social interaction. By placing the experimental approach of second-person neuroscience on the theoretical foundation of the active inference framework, we inform the field of social neuroscience about the mechanisms of real-life interactions. We thereby hope to contribute to the theoretical foundations of empirical second-person …