The processing of information conveyed by faces is a critical component of social communication. While the neurophysiology of processing upright faces has been studied extensively in autism spectrum disorder (ASD), less is known about the neurophysiological abnormalities associated with processing inverted faces in ASD. We used magnetoencephalography (MEG) to study both long-range and local functional connectivity, with the latter assessed using local cross-frequency coupling, in response to inverted faces stimuli, in 7-18 years old individuals with ASD and age and IQ matched typically developing (TD) individuals. We found abnormally reduced coupling between the phase of the alpha rhythm and the amplitude of the gamma rhythm in the fusiform face area (FFA) in response to inverted faces, as well as reduced long-range functional connectivity between the FFA and the inferior frontal gyrus (IFG) in response to inverted faces in the ASD group. These group differences were absent in response to upright faces. The magnitude of functional connectivity between the FFA and the IFG was significantly correlated with the severity of ASD, and FFA-IFG long-range functional connectivity increased with age in TD group, but not in the ASD group. Our findings suggest that both local and long-range functional connectivity are abnormally reduced in children with ASD when processing inverted faces, and that the pattern of abnormalities associated with the processing of inverted faces differs from the pattern of upright faces in ASD, likely due to the presumed greater reliance on top-down regulations necessary for efficient processing of inverted faces. LAY SUMMARY: We found alterations in the neurophysiological responses to inverted faces in children with ASD, that were not reflected in the evoked responses, and were not observed in the responses to upright faces. These alterations included reduced local functional connectivity in the fusiform face area (FFA), and decreased long-range alpha-band modulated functional connectivity between the FFA and the left IFG. The magnitude of long-range functional connectivity between the FFA and the inferior frontal gyrus was correlated with the severity of ASD. © 2021 International Society for Autism Research, Wiley Periodicals LLC.