Cooperation is a hallmark of human society. Humans often cooperate with strangers even if they will not meet each other again. This so-called indirect reciprocity enables large-scale cooperation among nonkin and can occur based on a reputation mechanism or as a succession of pay-it-forward behavior. Here, we provide the functional and anatomical neural evidence for two distinct mechanisms governing the two types of indirect reciprocity. Cooperation occurring as reputation-based reciprocity specifically recruited the precuneus, a region associated with self-centered cognition. During such cooperative behavior, the precuneus was functionally connected with the caudate, a region linking rewards to behavior. Furthermore, the precuneus of a cooperative subject had a strong resting-state functional connectivity (rsFC) with the caudate and a large gray matter volume. In contrast, pay-it-forward reciprocity recruited the anterior insula (AI), a brain region associated with affective empathy. The AI was functionally connected with the caudate during cooperation occurring as pay-it-forward reciprocity, and its gray matter volume and rsFC with the caudate predicted the tendency of such cooperation. The revealed difference is consistent with the existing results of evolutionary game theory: although reputation-based indirect reciprocity robustly evolves as a self-interested behavior in theory, pay-it-forward indirect reciprocity does not on its own. The present study provides neural mechanisms underlying indirect reciprocity and suggests that pay-it-forward reciprocity may not occur as myopic profit maximization but elicit emotional rewards.