The psychological mechanisms that high and low altruists exhibit in different contexts remain unknown. This study examined the underlying mechanisms of the effect of altruistic personality, social observation, and interpersonal distance on prosocial behavior using event-related potentials (ERPs). Participants with high and low altruism were asked to make prosocial or non-prosocial choices toward different interpersonal distances (friends, acquaintances, or strangers) under the (non)observer condition. The electrophysiological responses to the choice stimuli were simultaneously recorded. The behavioral results demonstrated that high altruists had more prosocial choices, and these choices were unaffected by interpersonal distance and social observation. However, low altruists made more prosocial choices toward friends and acquaintances under the observer than nonobserver conditions, whereas their prosocial choices toward strangers showed no difference. The ERP results demonstrated that low altruists showed more negative N2 when the choice stimuli were toward strangers and acquaintances or under the nonobserver condition. Furthermore, low altruists showed larger P3 under the observer than nonobserver conditions when the choice stimuli were toward friends and acquaintances, while this difference was absent when the choice stimuli were toward strangers. However, for high altruists, no effect of interpersonal distance and social observation was observed in N2 and P3. These results suggest that the prosocial behavior of low altruists is mainly driven by reputational incentives, whereas high altruists are primarily motivated by concern about the well-being of others. Our findings provide insights into the prosocial behavior of high and low altruists in different contexts and support the empathy-altruism hypothesis.