Human behavior in social dilemmas is strongly framed by the social context, but the mechanisms underlying this framing effect remain poorly understood. To identify the behavioral and neural responses mediating framing of social interactions, participants underwent functional MRI while playing a prisoner’s dilemma game. In separate neuroimaging sessions, the game was either framed as a cooperation game or a competition game. The framing of social decisions engaged the hippocampal formation, precuneus, dorsomedial prefrontal cortex, and lateral temporal gyrus. Among these regions, the engagement of the left hippocampus was further modulated by individual differences in empathy. Social decisions not adhering to the frame were associated with stronger engagement of the angular gyrus and trend increases in lateral orbitofrontal cortex, posterior intraparietal cortex, and temporopolar cortex. Our findings provide the first insight into the mechanisms underlying framing of behavior in social dilemmas, indicating increased engagement of the hippocampus and neocortical areas involved in memory, social reasoning, and mentalizing when participants make decisions that conform to the imposed social frame.