Mu suppression is the attenuation of EEG power in the alpha frequency range (8-12 Hz), recorded over the sensorimotor cortex during execution and observation of motor actions. Based on this dual characteristic it is thought to signalize activation of a human analogue of the mirror neuron system (MNS) found in macaque monkeys, though much uncertainty remains concerning its specificity and full significance. To further explore the hypothesized relationship between mu suppression and MNS activation, we investigated how it is affected by damage to cortical regions, including areas where the MNS is thought to reside. EEG was recorded in 33 first-event stroke patients during observation of video-clips showing reaching and grasping hand movements. We examined the modulation of EEG oscillations at central and occipital sites, and analyzed separately the lower (8-10 Hz) and higher (10-12 Hz) segments of the alpha/mu range. Suppression was determined relative to observation of a non-biological movement. Normalized lesion data were used to investigate how damage to regions of the fronto-parietal cortex affects the pattern of suppression. The magnitude of mu suppression during action observation was significantly reduced in the affected hemisphere compared to the unaffected hemisphere. Differences between the hemispheres were significant at central (sensorimotor) sites but not at occipital (visual) sites. Total hemispheric volume loss did not correlate with mu suppression. Suppression in the lower mu range in the unaffected hemisphere (C3) correlated with lesion extent within the right inferior parietal cortex. Our lesion study supports the role of mu suppression as a marker of MNS activation, as suggested by findings gathered in previous studies in normal subjects.