Interpersonal space is regulated carefully and updated dynamically during social interactions to maintain comfort. We investigated the naturalistic processing of interpersonal distance in real time and space using a powerful implicit neurophysiological measure of attentional engagement. In a sample of 37 young adults recruited at a UK university, we found greater EEG alpha band suppression when a person 'occupies' or'moves into' near-personal space than for a person occupying or moving into public space. In the dynamic condition only, the differences attenuated over the course of the experiment, and were sensitive to individual differences in social anxiety. These data show, for the first time, neurophysiological correlates of interpersonal distance coding in a naturalistic setting. Critically, while veridical distance is important for attentional response to the presence of a person in one's space, the behavioural relevance of their movement through public and personal space takes primacy.