BACKGROUND: Social anxiety disorder constitutes a significant problem for people with psychosis. It is unclear whether this is a by-product of persecutory thinking. AIMS: To compare the phenomenology of social anxiety disorder in first-episode psychosis with that in a group without psychosis. The relationship between social anxiety and psychosis symptoms was investigated. METHOD: A sample of people with first-episode psychosis (FEP group) was compared with a sample with social anxiety disorder without psychosis (SaD group). RESULTS: Of the individuals in the FEP group (n = 80) 25% were diagnosed with an ICD-10 social anxiety disorder (FEP/SaD group); a further 11.6% reported severe difficulties in social encounters. The FEP/SaD and SaD groups reported comparable levels of social anxiety, autonomic symptoms, avoidance and depression. Social anxiety in psychosis was not related to the positive symptoms of the Positive and Negative Syndrome Scale (PANSS) including suspiciousness/persecution. However, a significantly greater percentage of socially anxious v. non-socially anxious individuals with psychosis expressed perceived threat from persecutors, although this did not affect the severity of social anxiety within the FEP/SaD group. The majority of those in the FEP/SaD group did not have concurrent persecutory delusions. CONCLUSIONS: Social anxiety is a significant comorbidity in first-episode psychosis. It is not simply an epiphenomenon of psychotic symptoms and clinical paranoia, and it has more than one causal pathway. For a subgroup of socially anxious people with psychosis, anticipated harm is present and the processes that underlie its relationship with social anxiety warrant further investigation.