Social cognitive impairments, particularly deficits and distortions in recognition and interpretation of social cues and representations of thoughts, intentions, and feelings of others—termed mentalization—are a key contributor to the pathology and morbidity of a number of psychiatric disorders, including the schizophrenia spectrum, the autism spectrum and personality disorders. Individuals with schizophrenia spectrum disorders have deficits in social cognition (hypomentalization), while individuals with borderline personality disorder seem to have exaggerated and distorted social cognition (hypermentalization). However, the specificity and mechanisms of these impairments remain unclear. Therefore, a better understanding of the modulation of social cognition is a priority for developing interventions both pharmacologic and psychosocial. We propose here to examine the effects of oxytocin, known to be a key regulator of social cognition through modulating frontolimbic neural circuitry, on social cognition in schizotypal and borderline patients. In doing so, we aim to characterize a model of optimum social cognitive activity to direct the development of treatments, including dosing and target population-specific effects.