The question of how the brain represents the spatial relationship between the own body and external objects is fundamental. Here we investigate the neural correlates of the somatic perception of bimanual interaction with an external object. A novel bodily illusion was used in conjunction with functional magnetic resonance imaging (fMRI). During fMRI scanning, seven blindfolded right-handed participants held a cylinder between the palms of the two hands while the tendon of the right wrist extensor muscle was vibrated. This elicited a kinesthetic illusion that the right hand was flexing and that the hand-held cylinder was shrinking from the right side. As controls, we vibrated the skin surface over the nearby bone beside the tendon, or vibrated the tendon when the hands were not holding the object. Neither control condition elicited this illusion. The significance of the illusion was also confirmed in supplementary experiments outside the scanner on another 16 participants. The bimanual shrinking-object illusion activated anterior parts of the superior parietal lobule (SPL) bilaterally. This region has never been activated in previous studies on unimanual hand or hand-object illusion. The illusion also activated left-hemispheric brain structures including area 2 and inferior parietal lobule, an area related to illusory unimanual hand-object interaction between a vibrated hand and a touched object in our previous study. The anterior SPL seems to be involved in the somatic perception of bimanual interaction with an external object, probably by computing the spatial relationship between the two hands and a hand-held object.