There is a growing realization in cognitive science that a theory of embodied intersubjectivity is needed to better account for social cognition. We highlight some challenges that must be addressed by attempts to interpret "simulation theory' in terms of embodiment, and argue for an alternative approach that integrates phenomenology and dynamical systems theory in a mutually informing manner. Instead of "simulation' we put forward the concept of the "extended body', an enactive and phenomenological notion that emphasizes the socially mediated nature of embodiment. To illustrate the explanatory potential of this approach, we replicate an agent-based model of embodied social interaction. An analysis of the model demonstrates that the extended body can be explained in terms of mutual dynamical entanglement: inter-bodily resonance between individuals can give rise to self-sustaining interaction patterns that go beyond the behavioral capacities of isolated individuals by modulating their intra-bodily conditions of behavior generation.