Tracking eye-movements provides easy access to cognitive processes involved in visual and sensorimotor processing. More recently, the underlying neural mechanisms have been examined by combining eye-tracking and functional neuroimaging methods. Apart from extracting visual information, gaze also serves important functions in social interactions. As a deictic cue, gaze can be used to direct the attention of another person to an object. Conversely, by following other persons' gaze we gain access to their attentional focus, which is essential for understanding their mental states. Social gaze has therefore been studied extensively to understand the social brain. In this endeavor, gaze has mostly been investigated from an observational perspective using static displays of faces and eyes. However, there is growing consent that observational paradigms are insufficient for an understanding of the neural mechanisms of social gaze behavior, which typically involve active engagement in social interactions. Recent methodological advances have allowed increasing ecological validity by studying gaze in face-to-face encounters in real-time. Such improvements include interactions using virtual agents in gaze-contingent eye-tracking paradigms, live interactions via video feeds, and dual eye-tracking in two-person setups. These novel approaches can be used to analyze brain activity related to social gaze behavior. This review introduces these methodologies and discusses recent findings on the behavioral functions and neural mechanisms of gaze processing in social interaction.