The COVID-19 pandemic drastically changed face-to-face interactions, as face masks cover facial zones and affect face perception. Preterm birth is associated with altered face perception, which is important in socio-cognitive development. Use of face masks in neonatal units could further impede face perception development. We assessed the impact of face masks on face perception, in preterm (23–30 weeks gestation at birth, n = 24) and term infants (n = 24) at 6 months’ post-term age, using functional near-infrared spectroscopy (fNIRS). The infants viewed alternating 5-s trials with images of full or masked happy faces, interspersed with 9-15 s baseline trials. Changes in oxy- and deoxy-haemoglobin concentration (ΔHbO and ΔHbR, µM), were measured using multichannel fNIRS covering inferior-frontal, temporo-parietal, and lateral occipital regions. Term infants showed higher ΔHbO than preterm infants for full faces in the right inferior-frontal region. The ΔHbO was higher for full than masked faces in the right temporo-parietal region for term infants, but not preterm infants. These findings reveal lower brain activation in preterm compared to term infants in the inferior-frontal region which is important for face and emotion processing. Preterm infants also show no differential brain response between full vs masked faces, reflecting altered face perception at 6 months’ post-term age.