This review was undertaken to describe the psychological processes that are associated with the social experiences and behaviours of people with psychosis. A systematic search was conducted using MEDLINE and PsycINFO search engines. In each of the major topic domains, the search was comprised of review articles published from 2004 to present, and individual article searches for papers published from 2010 to present. The key psychological mechanisms in this context are social cognition, self-concept, emotion, and communication. While diverse in content, there were several cross-cutting themes in these literatures. These include evidence of the presence of social processing difficulties in high-risk and psychosis populations that have both state and trait characteristics, are related to, but not fully accounted for by, neurocognition and symptomatology, and have significant implications for social functioning. There are numerous established and promising treatments linked to our understanding of social cognition. Limitations cutting across these literatures include a substantial reliance on cross-sectional studies that use control groups comprised of people who have not experienced significant psychological or social adversity. There is also limited inquiry into how psychological mechanisms may differ owing to sex, ethnicity, and race. Despite these issues, this line of inquiry is very promising as part of the larger movement toward an integrative model of psychosis that is able to account for the complex interactions of social, biological, and psychological risks.