C-tactile (CT) afferents encode caress-like touch that supports social-emotional development, and stimulation of the CT system engages the insula and cortical circuitry involved in social-emotional processing. Very few neuroimaging studies have investigated the neural mechanisms of touch processing in people with autism spectrum disorder (ASD), who often exhibit atypical responses to touch. Using functional magnetic resonance imaging, we evaluated the hypothesis that children and adolescents with ASD would exhibit atypical brain responses to CT-targeted touch. Children and adolescents with ASD, relative to typically developing (TD) participants, exhibited reduced activity in response to CT-targeted (arm) versus non-CT-targeted (palm) touch in a network of brain regions known to be involved in social-emotional information processing including bilateral insula and insular operculum, the right posterior superior temporal sulcus, bilateral temporoparietal junction extending into the inferior parietal lobule, right fusiform gyrus, right amygdala, and bilateral ventrolateral prefrontal cortex including the inferior frontal and precentral gyri, suggesting atypical social brain hypoactivation. Individuals with ASD (vs. TD) showed an enhanced response to non-CT-targeted versus CT-targeted touch in the primary somatosensory cortex, suggesting atypical sensory cortical hyper-reactivity.