Social anxiety disorder (SAD) is characterized by an excessive fear of social evaluation and a persistently negative view of the self. Here we test the hypothesis that negative biases in brain responses and in social learning of self-related information contribute to the negative self-image and low self-esteem characteristic of SAD. Adult participants diagnosed with social anxiety (N = 21) and matched controls (N = 23) rated their performance and received social feedback following a stressful public speaking task. We investigated how positive versus negative social feedback altered self-evaluation and state self-esteem and used functional Magnetic Resonance Imaging (fMRI) to characterize brain responses to positive versus negative feedback. Compared to controls, participants with SAD updated their self-evaluation and state self-esteem significantly more based on negative compared to positive social feedback. Responses in the frontoparietal network correlated with and mirrored these behavioral effects, with greater responses to positive than negative feedback in non-anxious controls but not in participants with SAD. Responses to social feedback in the anterior insula and other areas mediated the effects of negative versus positive feedback on changes in self-evaluation. In non-anxious participants, frontoparietal brain areas may contribute to a positive social learning bias. In SAD, frontoparietal areas are less recruited overall and less attuned to positive feedback, possibly reflecting differences in attention allocation and cognitive regulation. More negatively biased brain responses and social learning could contribute to maintaining a negative self-image in SAD and other internalizing disorders, thereby offering important new targets for interventions.