Virtual reality (VR) enables the real-time assessment of paranoid ideation and of associated social performance. In this two-phase study, we aimed to recruit a general population sample to investigate the association between trait paranoia and cognitive, emotional, and behavioral components of social performance. In phase 1, a general population online survey (N = 609) investigated how trait paranoia related to fear of negative evaluation (FNE), interpersonal sensitivity, social avoidance and distress (SAD), mood, and demographic characteristics. In phase 2, we piloted a new VR social situation paradigm (a party in a bar) with a subsample of participants who scored high or low in trait paranoia. Eighty-nine participants entered the VR party in a bar scenario to evaluate the acceptability of the task and the relationship between paranoid ideation and social performance. As hypothesized, in phase 1, trait paranoia was associated with FNE, SAD, interpersonal sensitivity, mood, and demographics (all small-to-medium effects); in phase 2, participants found the VR environment acceptable and immersive; exposure to the VR environment elicited a range of cognitive, emotional, and behavioral components of social performance; and high trait paranoia participants reported higher state paranoia and greater negative components of social performance (all medium effects). The study tests a novel sample recruited predominantly online and validates the virtual environment for psychological assessment and treatment. This result suggests that the new VR scenario could be used as a psychological assessment and treatment tool for people who experience paranoia in social situations.