Motor imagery (MI) and action observation have proven to be efficacious adjuncts to traditional physiotherapy for enhancing motor recovery following stroke. Recently, researchers have used a combined approach called imagined imitation (II), where an individual watches a motor task being performed, while simultaneously imagining they are performing the movement. While neurofeedback (NFB) has been used extensively with MI to improve patients' ability to modulate sensorimotor activity and enhance motor recovery, the effectiveness of using NFB with II to modulate brain activity is unknown. This project tested the ability of participants to modulate sensorimotor activity during electroencephalography-based II-NFB of a complex, multi-part unilateral handshake, and whether this ability transferred to a subsequent bout of MI. Moreover, given the goal of translating findings from NFB research into practical applications, such as rehabilitation, the II-NFB system was designed with several user interface and user experience features, in an attempt to both drive user engagement and match the level of challenge to the abilities of the subjects. In particular, at easy difficulty levels the II-NFB system incentivized contralateral sensorimotor up-regulation (via event related desynchronization of the mu rhythm), while at higher difficulty levels the II-NFB system incentivized sensorimotor lateralization (i.e., both contralateral up-regulation and ipsilateral down-regulation). Thirty-two subjects, receiving real or sham NFB attended four sessions where they engaged in II-NFB training and subsequent MI. Results showed the NFB group demonstrated more bilateral sensorimotor activity during sessions 2–4 during II-NFB and subsequent MI, indicating mixed success for the implementation of this particular II-NFB system. Here we discuss our findings in the context of the design features included in the II-NFB system, highlighting limitations that should be considered in future designs.