Recently, there has been growing interest in understanding the causes and consequences of moral injury-defined as the functionally impairing psychological, biological, spiritual, behavioural, and social impact of perpetrating, failing to prevent, bearing witness to, or being a victim of acts that transgress deeply-held moral beliefs and expectations. Neuroimaging studies have revealed that moral injury is associated with functional alterations in regions that underlie emotions, somatosensory processing, internally-oriented thoughts, and cognitive control. However, to date, no study has examined the impact of moral injury on how people reason, or its neural correlates. We hypothesized that content referencing moral injury themes would reduce reasoning accuracy, and engage structures associated with memory and/or emotion. We tested this hypothesis by administering structurally identical arguments that included neutral content or content referencing salient moral injury outcomes (e.g., shame, anger, trust violations) to Canadian Armed Forces members in the fMRI scanner. As predicted, relative to neutral content, reasoning accuracy was reduced on arguments with moral injury themes, particularly in participants who surpassed clinical thresholds on the Moral Injury Outcome Scale (≥31) and the Posttraumatic Stress Disorder Checklist for DSM-5 (≥33), suggesting that reductions in reasoning accuracy might be driven by elevated moral injury symptoms and psychological distress. Furthermore, reasoning on arguments with moral injury-related content engaged the right posterior parahippocampus (BA 19). Given this region's role in representing contextual associations in episodic memory, this suggests that content with moral injury themes might trigger contextual associations that interfere with the reasoning system.