Characterizing the brain mechanisms that allow humans to use tools to interact with the environment is a major goal in neuroscience. It has been proposed that handheld tools are incorporated into the multisensory representation of the body and its surrounding (peripersonal) space, underlying our remarkable tool use ability. One single-cell recording study in tool-using monkeys provided qualitative support for this hypothesis, and the results from a vast number of human studies employing different experimental paradigms have been ambiguous. Here, we made use of the recently reported magnetic touch illusion—a perceptual correlate of peripersonal space—to examine the effect of tool use on the representation of visuotactile peripersonal space. The results showed that active tool use leads to an extension of the “illusion volume” around the entire length of a tool, which was significantly greater compared with a manual control task. These findings support the notion that the multisensory representation of peripersonal space is extended to incorporate handheld tools and provide a three-dimensional estimation of this remapping process.