Testosterone modulates mood and sexual function in women. However, androgen levels decline with age, which may relate to the age-associated change in sexual functioning and the prevalence of mood and anxiety disorders. These effects of testosterone are potentially mediated by the amygdala. In the present study, we investigated whether the age-related decline in androgen levels is associated with reduced amygdala activity, and whether exogenous testosterone can restore amygdala activity. Healthy young and middle-aged women participated during the early follicular phase of the menstrual cycle, and amygdala responses to biologically salient stimuli were measured with functional magnetic resonance imaging (fMRI). Androgen levels were lower in middle-aged than young women, which was associated with decreased amygdala reactivity. Endogenous testosterone levels correlated positively with amygdala reactivity across the young and middle-aged women. The middle-aged women received a single nasal dose of testosterone in a double-blind, placebo-controlled, crossover manner, which rapidly increased amygdala reactivity to a level comparable to the young women. The enhanced testosterone levels correlated positively with superior frontal cortex responses and negatively with orbitofrontal cortex responses across individuals, which may reflect testosterone-induced changes in amygdala regulation. These results show that testosterone modulates amygdala reactivity in women, and suggest that the age-related decline in androgen levels contribute to the decrease in amygdala reactivity.