The parieto-frontal cortical circuit that is active during action observation is the circuit with mirror properties that has been most extensively studied. Yet, there remains controversy on its role in social cognition and its contribution to understanding the actions and intentions of other individuals. Recent studies in monkeys and humans have shed light on what the parieto-frontal cortical circuit encodes and its possible functional relevance for cognition. We conclude that, although there are several mechanisms through which one can understand the behaviour of other individuals, the parieto-frontal mechanism is the only one that allows an individual to understand the action of others 'from the inside' and gives the observer a first-person grasp of the motor goals and intentions of other individuals.