Pyramidal tract neurons (PTNs) within macaque rostral ventral premotor cortex (F5) and primary motor cortex (M1) provide direct input to spinal circuitry and are critical for skilled movement control, but can also be active during passive action observation. In M1, relatively reduced PTN activity during grasp observation may explain the lack of overt movement, and differences in the functional contributions of premotor and motor cortex between execution and observation could support the flexible generation or suppression of grasping movements during these two conditions. We recorded from single neurons, including identified PTNs in the hand and arm area of M1, and in premotor area F5 of two adult male macaques, while they executed, observed, or simply withheld (NoGo) reach-to-grasp and hold actions. Simultaneous electromyographic recordings from multiple arm and hand muscles confirmed that mirror activity during observation could not be attributed to small levels of muscle activity. Single neuron responses were heterogeneous, with classical and suppression mirror neurons (MNs) in both cortical areas. At the population level, F5 mirror activity was more sustained and similar in profile to execution activity. In contrast, although some neurons mirror during the grasp and hold, M1 population activity during observation contained signatures of a withholding state in the lead-up to observed movement onset. Thus, while F5 maintains a more sustained representation of grasping actions, M1 and its output population may dissociate signals required for the initiation of movement from those associated with the representation of grasp in order to flexibly guide behaviour.