The widespread distribution in Papua New Guinea of obsidian stemmed tools dated to the mid-Holocene has led scholars to postulate the existence of large interaction spheres. A newly reported artifact from Biak Island, West Papua provides the stimulus for reconsidering the role of this tool type in regional social interaction. The tool was hammer-dressed, a technique unknown for obsidian flaked tools elsewhere in the world and only rarely applied to obsidian artifacts in Melanesia. This new find closely resembles hammer-dressed obsidian stemmed tools from Garua Island, Papua New Guinea, but these are characterized by LA/ICPMS, PIXE-PGME, and INAA to the local Baki and Kutau-Bao obsidian sources in New Britain, Papua New Guinea, whereas the Biak tool is sourced to outcrops on Lou Island in Manus Province, Papua New Guinea. Hypotheses for functional, symbolic, and social roles of hammer-dressing are explored and evaluated on the basis of replication experiments and use-wear analyses. We argue that the complex and exceptionally rare technologies used for manufacturing hammer-dressed stemmed tools and applied to obsidian acquired from two widely separated obsidian sources substantially add to previous evidence for wide-scale social interaction during the mid-Holocene. The existence of these social networks might also have provided a mechanism for the rapid, extensive spread of innovations like Austronesian languages or Lapita pottery.