Previous research suggests integration of visual and somatosensory inputs is enhanced within reaching (peripersonal) space. In such experiments, somatosensory inputs are presented on the body while visual inputs are moved relatively closer to, or further from the body. It is unclear, therefore, whether enhanced integration in “peripersonal space” is truly due to proximity of visual inputs to the body space, or, simply the distance between the inputs (which also affects integration). Using a modified induction of the rubber hand illusion, here we measured proprioceptive drift as an index of visuosomatosensory integration when distance between the two inputs was constrained, and absolute distance from the body was varied. Further, we investigated whether integration varies with proximity of inputs to the habitual action space of the arm—rather than the actual arm itself. In Experiment 1, integration was enhanced with inputs proximal to habitual action space, and reduced with lateral distance from this space. This was not attributable to an attentional or perceptual bias of external space because the pattern of proprioceptive drift was opposite for left and right hand illusions, that is, consistently maximal at the shoulder of origin (Experiment 2). We conclude that habitual patterns of action modulate visuosomatosensory integration. It appears multisensory integration is modulated in locations of space that are functionally relevant for behavior, whether an actual body part resides within that space or not.