There are increasing reports of people experiencing pain when observing pain in another. This describes the phenomenon of synaesthetic pain which, until recently, had been primarily reported in amputees with phantom pain. In the current study, we used electroencephalography (EEG) to investigate how amputees who experience synaesthetic pain process pain observed in another. Participants were grouped according to amputees who experience phantom and synaesthetic pain (n = 8), amputees who experience phantom pain but not synaesthetic pain (n = 10) and healthy controls (n = 10). Participants underwent EEG as they observed still images of hands and feet in potentially painful and non-painful situations. We found that pain synaesthetes showed some reduced event-related potential (ERP) components at certain electrode sites, and reduced theta- and alpha band power amplitude at a central electrode. The finding of reduced ERP amplitude and theta band power may reflect inhibition of the processing of observed pain (e.g. avoidance/guarding as a protective strategy), and reduced alpha band power may indicate a disinhibition in control processes that may result in synaesthetic pain. These results provide the first documentation of atypical neurophysiological activity in amputees who experience synaesthetic pain when processing pain in another.