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Interpreting others’ actions relies on an understanding of their current mental state. Emerging research has begun to identify a number of factors that give rise to individual differences in this ability. We report an event-related brain potential study where participants (N = 28) read contexts that described a character having a true belief (TB) or false belief (FB) about an object’s location. A second sentence described where that character would look for the object. Critically, this sentence included a sentence-final noun that was either consistent or inconsistent with the character’s belief. Participants also completed the Empathy Quotient questionnaire. Analysis of the N400 revealed that when the character held a TB about the object’s location, the N400 waveform was more negative-going for belief inconsistent vs belief consistent critical words. However, when the character held an FB about the object’s location the opposite pattern was found. Intriguingly, correlations between the N400 inconsistency effect and individuals’ empathy scores showed a significant correlation for FB but not TB. This suggests that people who are high in empathy can successfully interpret events according to the character’s FB, while low empathizers bias their interpretation of events to their own egocentric view.