Abstract Cooperation behaviors during social decision-making have been shown to be sensitive to manipulations of context. However, it remains unclear how aspects of context in dynamic social interactions, such as observed nonverbal behaviors, may modulate cooperation decisions and the associated neural mechanisms. In this study, participants responded to offers from proposers to split $10 in an Ultimatum Game following observation of proposer approach (friendly) or avoidance (nonfriendly) behaviors, displayed by dynamic whole-body animated avatars, or following a nonsocial interaction control condition. As expected, behavioral results showed that participants tended to have greater acceptance rates for unfair offers following observed nonverbal social interactions with proposers compared with control, suggesting an enhancing effect of social interactions on cooperative decisions. ERP results showed greater N1 and N2 responses at the beginning of social interaction conditions compared with control, and greater sustained and late positivity responses for observed approach and avoidance proposer behaviors compared with control. Event-related spectral perturbation (ERSP) results showed differential sensitivity within theta, alpha, and beta bands during observation of social interactions and offers that was associated with subsequent decision behaviors. Together, these results point to the impact of proposers' nonverbal behaviors on subsequent cooperation decisions at both behavioral and neural levels. The ERP and ERSP findings suggest modulated attention, monitoring, and processing of biological motion during the observed nonverbal social interactions, influencing the participants' responses to offers. These findings shed light on electrophysiological correlates of response to observed social interactions that predict subsequent social decisions.