In this review article, we summarize the main findings from empirical studies that used dance-related forms of rhythmical full body movement as a research tool for investigating action understanding and social cognition. This work has proven to be informative about behavioral and brain mechanisms that mediate links between perceptual and motor processes invoked during the observation and execution of spatially-temporally coordinated action and interpersonal interaction. The review focuses specifically on processes related to (a) motor experience and expertise, (b) learning and memory, (c) action, intention, and emotion understanding, and (d) audio-visual synchrony and timing. Consideration is given to the relationship between research on dance and more general embodied cognition accounts of action understanding and social cognition. Finally, open questions and issues concerning experimental design are discussed with a view to stimulating future research on social-cognitive aspects of dance.