Posttraumatic stress disorder (PTSD) is a severe psychiatric disorder prevalent in combat veterans. Previous neuroimaging studies have demonstrated that patients with PTSD exhibit abnormal responses to non-threatening visual and auditory stimuli, but have not examined somatosensory processing. Thirty male combat veterans, 16 with PTSD and 14 without, completed a tactile stimulation task during a 306-sensor magnetoencephalography (MEG) recording. Significant oscillatory neural responses were imaged using a beamforming approach. Participants also completed clinical assessments of PTSD, combat exposure, and depression. We found that veterans with PTSD exhibited significantly reduced activity during early (0 to 125 ms) tactile processing compared with combat controls. Specifically, veterans with PTSD had weaker activity in the left postcentral gyrus, left superior parietal area, and right prefrontal cortex in response to nonthreatening tactile stimulation relative to veterans without PTSD. The magnitude of activity in these brain regions was inversely correlated with symptom severity, indicating that those with the most severe PTSD had the most abnormal neural responses. Our findings are consistent with a resource allocation view of perceptual processing in PTSD, which directs attention away from nonthreatening sensory information.