Approximately 10% of trauma-exposed individuals go on to develop post-traumatic stress disorder (PTSD). Neural emotion regulation may be etiologically involved in PTSD development. Oxytocin administration early post-trauma may be a promising avenue for PTSD prevention, as intranasal oxytocin has previously been found to affect emotion regulation networks in healthy individuals and psychiatric patients. In a randomized double-blind placebo-controlled between-subjects functional magnetic resonance (fMRI) study, we assessed the effects of a single intranasal oxytocin administration (40 IU) on seed-based amygdala resting-state FC with emotion regulation areas (ventromedial prefrontal cortex (vmPFC), ventrolateral prefrontal cortex (vlPFC)), and salience processing areas (insula, dorsal anterior cingulate cortex (dACC)) in 37 individuals within 11 days post trauma. Two resting-state scans were acquired; one after neutral- and one after trauma-script-driven imagery. We found that oxytocin administration reduced amygdala-left vlPFC FC after trauma script-driven imagery, compared with neutral script-driven imagery, whereas in PL-treated participants enhanced amygdala-left vlPFC FC was observed following trauma script-driven imagery. Irrespective of script condition, oxytocin increased amygdala–insula FC and decreased amygdala–vmPFC FC. These neural effects were accompanied by lower levels of sleepiness and higher flashback intensity in the oxytocin group after the trauma script. Together, our findings show that oxytocin administration may impede emotion regulation network functioning in response to trauma reminders in recently trauma-exposed individuals. Therefore, caution may be warranted in administering oxytocin to prevent PTSD in distressed, recently trauma-exposed individuals.