We present novel research on the cortical dynamics of atypical perceptual and emotional processing in people with symptoms of depersonalization-derealization disorder (DP-DR). We used electroencephalography (EEG)/event-related potentials (ERPs) to delineate the early perceptual mechanisms underlying emotional face recognition and mirror touch in adults with low and high levels of DP-DR symptoms (low-DP and high-DP groups). Face-sensitive visual N170 showed markedly less differentiation for emotional versus neutral face-voice stimuli in the high- than in the low-DP group. This effect was related to self-reported bodily symptoms like disembodiment. Emotional face-voice primes altered mirror touch at somatosensory cortical components P45 and P100 differently in the two groups. In the high-DP group, mirror touch occurred only when seeing touch after being confronted with angry face-voice primes. Mirror touch in the low-DP group, however, was unaffected by preceding emotions. Modulation of mirror touch following angry others was related to symptoms of self-other confusion. Results suggest that others' negative emotions affect somatosensory processes in those with an altered sense of bodily self. Our findings are in line with the idea that disconnecting from one's body and self (core symptom of DP-DR) may be a defence mechanism to protect from the threat of negative feelings, which may be exacerbated through self-other confusion. This article is part of the theme issue 'Sensing and feeling: an integrative approach to sensory processing and emotional experience'.