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. This randomized double-blind placebo-controlled cross-over study investigated the mechanisms for ketamine's effects on the bodily sense of self in the context of affective touch. Thirty healthy participants (15 females/15 males, age 19-39) received intravenous ketamine or placebo while performing self-touch and receiving touch by someone else during functional MRI - a previously established neural measure of tactile self-other-differentiation. 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 elicited dissociation and reduced neural activity associated with self-other-differentiation in the right temporoparietal cortex, which was most pronounced during other-touch. This reduction correlated with ketamine-induced reductions in interoceptive awareness. The temporoparietal cortex showed higher connectivity to somatosensory cortex and insula during other- compared to self-touch. This difference was augmented by ketamine, and correlated with dissociation strength for somatosensory cortex. These results demonstrate that disrupting the self-experience through ketamine administration affects neural activity associated with self-other-differentiation in a region involved in touch perception and social cognition, especially with regard to social touch by someone else. 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. These findings provide further evidence for the intricate relationship of the bodily self with the tactile sense.