It has been proposed that actions are intrinsically linked to perception. The idea behind these theories is that observing, imagining or in any way representing an action excites the motor programs used to execute that same action. There is neurophysiological evidence that neurons in premotor cortex of monkeys respond both during movement execution and during the observation of goal-directed action ('mirror neurons'). In humans, a proportion of the brain regions involved in executing actions are activated by the mere observation of action (the 'mirror system'). In this paper, we briefly review recent empirical studies of the mirror system, and discuss studies demonstrating interference effects between observed and executed movements. This interference, which might be a form of 'motor contagion', seems to arise specifically from the observation of biological movements, whether or not these movements are goal-directed. We suggest that this crude motor contagion is the first step in a more sophisticated predictive system that allows us to infer goals from the observation of actions.