Abundant　evidence　has　revealed　that　social　observation　could　enhance　people’s　norm-enforcement　behaviors　to　norm　violators.　However,　whether　such　enhancement　is　strategically　reputation-based　without　changes　on　awareness　of　social　norms　or　it　is　accompanied　with　strengthened　perception　of　norm　violations　remains　unclear.　We　aimed　to　test　these　two　hypotheses　using　a　modified　Ultimatum　Game　(UG).　Participants　played　the　UG　as　responders　in　the　fMRI　scanner　after　being　instructed　the　rules　of　the　game　and　how　the　observers　monitored　their　performances　during　the　task.　Behavioral　results　showed　that　unfair　offers　were　perceived　more　unfair　(decreased　fairness　ratings)　and　rejected　more　often　under　the　condition　with　social　observation　than　that　without　observation　(the　control　condition).　The　changes　in　fairness　ratings　predicted　the　increase　of　rejection　rates　between　two　conditions,　which　provided　more　evidence　for　the　latter　hypothesis.　Neural　results　demonstrated　that　right　insula　and　anterior　cingulate　cortex　associated　with　processing　norm　violations　and/or　negative　emotions　were　more　activated　in　response　to　unfair　treatments　under　social　observation　relative　to　the　control　condition.　Furthermore,　bilateral　anterior　insula,　anterior　cingulate　cortex,　and　right　amygdala　(an　emotional　processing　structure)　showed　increased　activations　with　the　reduction　of　fairness　ratings　under　social　observation.　Besides,　compared　to　the　control　condition,　rejecting　unfair　trials　under　social　observation　induced　more　left　anterior　insula　activation.　These　findings　indicated　that　the　increase　of　norm-enforcement　behaviors　in　the　UG　under　social　observation　was　more　than　a　behavioral　strategy　for　social　desirability,　but　a　result　of　enhanced　sensitivity　to　fairness　norm　violations　and　unfairness-related　negative　feelings.　©　2020,　Springer-Verlag　GmbH　Germany,　part　of　Springer　Nature.