Initial studies with healthy subjects and individuals with high risk for psychosis have suggested that virtual reality (VR) environments may be used to investigate social and psychological mechanisms of psychosis. One small study reported that VR can safely be used in individuals with current persecutory delusions. The present pilot study investigated the feasibility and potential negative side effects of exposure to different virtual social risk environments in patients with first episode psychosis and in healthy controls. Seventeen patients with first episode psychosis (FEP) and 24 healthy control subjects (HC) participated in four virtual experiments during which they walked for 3.5-4 minutes in a virtual café, looking for avatars with digits on their clothing. The level of paranoid thoughts, as well as psychological, physiological, and behavioral correlates of paranoid thoughts, were measured in different virtual social risk environments, manipulating two factors: population density and ethnicity of avatars. FEP and HC frequently had paranoid thoughts about avatars. Paranoia in the real world correlated strongly with paranoid thoughts about avatars in virtual environments (Spearman's ρ=0.67 and 0.54 in FEP and HC respectively, p<0.01). FEP kept a smaller distance to avatars than HC. In FEP, but not in HC, galvanic skin response was significantly stronger in virtual environments with avatars of other ethnicity than in the own ethnicity condition. These results suggest that VR is an acceptable and sufficiently realistic method to use in patients with first episode psychosis. VR research may help to increase our understanding of the social and psychological mechanisms of psychosis and to develop new treatment applications.