A coherent sense of self is crucial for social functioning and mental health. The N-methyl-D-aspartate antagonist ketamine induces short-term dissociative experiences and has therefore been used to model an altered state of self-perception. However, the mechanisms for its effects on the bodily sense of self remain largely unknown. In this randomized double-blind placebo-controlled within-subject study, 30 participants received intravenous ketamine while performing a previously validated task during functional MRI: self-touch and touch by someone else were used as a measure of self-other-distinction. Afterwards, tactile detection thresholds during self- and other-touch were assessed, as well as dissociative states, interoceptive awareness, and social touch attitudes. Compared to placebo, ketamine administration induced a higher state of dissociation and a reduction of self-other distinction in the temporoparietal cortex. This reduction correlated with ketamine-related reductions in interoceptive awareness. Our results indicate that disrupting the self-experience by ketamine-administration affects self-other-distinction in a region associated with touch perception and social cognition. This process may be driven by ketamine-induced effects on top-down signaling, rendering the processing of predictable self-generated and unpredictable other-generated touch more similar. Our findings provide further evidence for the intricate relationship of the bodily self with social touch.