Promising initial data indicate that the glutamate N-methyl-D-aspartate (NMDA) receptor antagonist ketamine may be beneficial in post-traumatic stress disorder (PTSD). Here, we explore the neural correlates of ketamine-related changes in PTSD symptoms, using a rich battery of functional imaging data (two emotion-processing tasks and one task-free scan), collected from a subset of participants of a randomized clinical trial of repeated-dose intravenous ketamine vs midazolam (total N = 21). In a pre-registered analysis, we tested whether changes in an a priori set of imaging measures from a target neural circuit were predictive of improvement in PTSD symptoms, using leave-one-out cross-validated elastic-net regression models (regions of interest in the target circuit consisted of the dorsal and rostral anterior cingulate cortex, ventromedial prefrontal cortex, anterior hippocampus, anterior insula, and amygdala). Improvements in PTSD severity were associated with increased functional connectivity between the ventromedial prefrontal cortex (vmPFC) and amygdala during emotional face-viewing (change score retained in model with minimum predictive error in left-out subjects, standardized regression coefficient [β] = 2.90). This effect was stronger in participants who received ketamine compared to midazolam (interaction β = 0.86), and persisted following inclusion of concomitant change in depressive symptoms in the analysis model (β = 0.69). Improvement following ketamine was also predicted by decreased dorsal anterior cingulate activity during emotional conflict regulation, and increased task-free connectivity between the vmPFC and anterior insula (βs = −2.82, 0.60). Exploratory follow-up analysis via dynamic causal modelling revealed that whilst improvement in PTSD symptoms following either drug was associated with decreased excitatory modulation of amygdala→vmPFC connectivity during emotional face-viewing, increased top-down inhibition of the amygdala by the vmPFC was only observed in participants who improved under ketamine. Individuals with low prefrontal inhibition of amygdala responses to faces at baseline also showed greater improvements following ketamine treatment. These preliminary findings suggest that, specifically under ketamine, improvements in PTSD symptoms are accompanied by normalization of hypofrontal control over amygdala responses to social signals of threat.