Monitoring one's own errors is a fundamental ability in terms of guiding and improving behavior, with specific neural substrates in the anterior cingulate cortex (ACC). Similarly, we can monitor others' actions and learn by observing their errors. The mirror neuron system may subserve the formation of shared representations for self-generated and observed actions, and recent research suggests that monitoring mechanisms also react to errors made by others. However, it remains unknown how these responses are modified when interpersonal context implies different goals for the actor and the observer. To investigate whether differences in social context can influence brain response to observed action errors, we manipulated competition vs. cooperation between two participants taking turns in a go/no-go task. Event-related potentials simultaneously recorded from both participants showed a typical negativity over frontocentral regions to self-generated errors, irrespective of interpersonal context, but early differential responses to other-generated errors only during cooperation, with sources in precuneus and medial premotor areas. Competition produced a distinct error-related negativity in ACC at later latencies. We conclude that error monitoring for others' actions depends on their congruence with personal goals, and recruits brain systems involved in self-referential processing specifically during cooperation.