Abstract: A popular hypothesis in the social sciences is that humans have social preferences to reduce inequality in outcome distributions because it has a negative impact on their experienced reward1, 2, 3. Although there is a large body of behavioural and anthropological evidence consistent with the predictions of these theories1, 4, 5, 6, there is no direct neural evidence for the existence of inequality-averse preferences. Such evidence would be especially useful because some behaviours that are consistent with a dislike for unequal outcomes could also be explained by concerns for social image7 or reciprocity8, 9, which do not require a direct aversion towards inequality. Here we use functional MRI to test directly for the existence of inequality-averse social preferences in the human brain. Inequality was created by recruiting pairs of subjects and giving one of them a large monetary endowment. While both subjects evaluated further monetary transfers from the experimenter to themselves and to the other participant, we measured neural responses in the ventral striatum and ventromedial prefrontal cortex, two areas that have been shown to be involved in the valuation of monetary and primary rewards in both social and non-social contexts10, 11, 12, 13, 14. Consistent with inequality-averse models of social preferences, we find that activity in these areas was more responsive to transfers to others than to self in the ‘high-pay’ subject, whereas the activity of the ‘low-pay’ subject showed the opposite pattern. These results provide direct evidence for the validity of this class of models, and also show that the brain’s reward circuitry is sensitive to both advantageous and disadvantageous inequality.