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Autism spectrum disorder (ASD) is characterized by core social deficits. Prognosis is poor, in part, because existing medications target only associated ASD features. Emerging evidence suggests that the neuropeptide oxytocin (OXT) may be a blood-based biomarker of social functioning and a possible treatment for ASD. However, prior OXT treatment trials have produced equivocal results, perhaps because of variability in patients’ underlying neuropeptide biology, but this hypothesis has not been tested. Using a double-blind, randomized, placebo-controlled, parallel design, we tested the efficacy and tolerability of 4-wk intranasal OXT treatment (24 International Units, twice daily) in 32 children with ASD, aged 6–12 y. When pretreatment neuropeptide measures were included in the statistical model, OXT compared with placebo treatment significantly enhanced social abilities in children with ASD [as measured by the trial’s primary outcome measure, the Social Responsiveness Scale (SRS)]. Importantly, pretreatment blood OXT concentrations also predicted treatment response, such that individuals with the lowest pretreatment OXT concentrations showed the greatest social improvement. OXT was well tolerated, and its effects were specific to social functioning, with no observed decrease in repetitive behaviors or anxiety. Finally, as with many trials, some placebo-treated participants showed improvement on the SRS. This enhanced social functioning was mirrored by a posttreatment increase in their blood OXT concentrations, suggesting that increased endogenous OXT secretion may underlie this improvement. These findings indicate that OXT treatment enhances social abilities in children with ASD and that individuals with pretreatment OXT signaling deficits may stand to benefit the most from OXT treatment.