In recent years, there has been a surge of interest in perception, evaluation, and memory for social interactions from a third-person perspective. One intriguing finding is a spatial distance compression effect when target dyads are facing each other. Specifically, face-to-face dyads are remembered as being spatially closer than back-to-back dyads. There is a vibrant debate about the mechanism behind this effect, and two hypotheses have been proposed. According to the social interaction hypothesis, face-to-face dyads engage a binding process that represents them as a social unit, which compresses the perceived distance between them. In contrast, the configuration hypothesis holds that the effect is produced by the front-to-front configuration of the two visual targets. In the present research we sought to test these accounts. In Experiment 1 we successfully replicated the distance compression effect with two upright faces that were facing each other, but not with inverted faces. In contrast, we found no distance compression effect with three types of nonsocial stimuli: arrows (Experiment 2a), fans (Experiment 2b), and cars (Experiment 3). In Experiment 4, we replicated this effect with another social stimuli: upright bodies. Taken together, these results provide strong support for the social interaction hypothesis.