When we produce actions we predict their likely consequences. Dominant models of action control suggest that these predictions are used to ‘cancel’ perceptual processing of expected outcomes. However, normative Bayesian models of sensory cognition developed outside of action propose that rather than being cancelled, expected sensory signals are represented with greater fidelity (sharpened). Here, we distinguished between these models in an fMRI experiment where participants executed hand actions (index vs little finger movement) while observing movements of an avatar hand. Consistent with the sharpening account, visual representations of hand movements (index vs little finger) could be read out more accurately when they were congruent with action and these decoding enhancements were accompanied by suppressed activity in voxels tuned away from, not towards, the expected stimulus. Therefore, inconsistent with dominant action control models, these data show that sensorimotor prediction sharpens expected sensory representations, facilitating veridical perception of action outcomes.