Posttraumatic stress disorder (PTSD) is the most highly prevalent mental health disorder among U.S. military Veterans. PTSD is a chronic disorder that is associated with significant morbidity, mortality, disability, and costly health care expenditures. The clinical impairment associated with PTSD among Veterans is severe and associated with comorbid depression, suicidality, substance abuse, physical health problems, interpersonal violence, and neuropsychiatric impairment. Despite these pervasive health consequences, the current treatment services offered to Veterans do not adequately address PTSD. Several promising psychosocial interventions, including Prolonged Exposure (PE) therapy, have been developed for the treatment of PTSD. Although PE is one of the most widely used evidence-based treatments for PTSD, there is substantial room for improvement in outcomes and retention rates. For example, approximately one-third of patients dropout of PE treatment prematurely, and the highest dropout rates occur among Veterans. Consistent with the VA Office of Research and Development initiative to develop effective treatments for PTSD, identifying pharmacotherapies to enhance PTSD treatment retention and outcomes is critical. Accumulating data from the investigators' group and others suggests that oxytocin is a promising candidate to achieve this goal. Oxytocin is known to promote prosocial behaviors associated with successful psychosocial treatment outcomes (e.g., trust, safety, social cognition) and has demonstrated positive effects on extinction learning in animal and human stress models. Furthermore, recent neuroimaging studies show that oxytocin has the ability to ameliorate dysregulation of the corticolimbic brain circuitry, which is a central component of the pathophysiology and maintenance of PTSD. In the only study to date examining the feasibility, acceptability, and preliminary efficacy of augmenting PE with oxytocin, the investigators' group found that participants randomized to the oxytocin condition demonstrated lower PTSD and depression symptoms during PE, and had higher working alliance scores compared to participants randomized to the placebo condition. Therefore, the primary objective of the proposed two-site Phase II study is to examine the ability of oxytocin (vs. placebo) combined with PE therapy to (1) reduce PTSD symptom severity, (2) improve rate of PTSD symptom improvement, and (3) improve PE adherence and retention rates. To accomplish these objectives, the investigators will employ a randomized, double-blind, placebo-controlled trial and use standardized, repeated dependent measures of change at five time points (baseline, mid-treatment, end of treatment, and 3 and 6 month follow-up). The proposed study directly addresses the mission of the Veterans Health Administration Blueprint for Excellence in that it seeks to advance personalized and proactive mental health care opportunities for Veterans. Findings from this study will provide critical new information regarding the efficacy of oxytocin to augment psychosocial treatment for PTSD, as well as information regarding the neurobiological mechanisms underlying PTSD and positive treatment response. Participants may choose to complete this research study via home-based telemedicine (HBT) care (i.e. service delivery to patients in their homes using consumer friendly, video-conferencing technology). HBT sessions will be delivered via standard desk, laptop computer, tablet, or smartphone using VA approved applications. All procedures that take place via telemedicine will be performed and completed as though they were in-person/in-office