Persons with high levels of paranoid ideation may be more sensitive to emotional stimuli, particularly negative emotions, reflecting the operation of a paranoid schema. However, this finding has not been consistently supported and needs further study. This study examined the effect of paranoia, as measured on a continuum, on emotion perception. It was predicted that higher levels of paranoia would be associated with improved emotion perception scores with better recognition for negative emotions than positive. A four-group ANOVA design was used to compare participants with clinical and sub-clinical paranoia to reflect the continuum view of paranoia. A group with persecutory delusions (N=30) was compared with three sub-clinical groups (N=88) on two posed emotion perception tasks. The sub-clinical participants were divided into high, moderate, and low groups based on scores from the Paranoia Scale, a widely used measure of sub-clinical paranoia. Persons with persecutory delusions had lower overall emotion perception scores than all of the sub-clinical groups. For negative emotions, persons with persecutory delusions had lower identification scores than the moderate and low sub-clinical groups, but were no different than the high sub-clinical group. Anger was especially problematic for clinical participants. There were no differences for positive emotions. Instead of an enhanced sensitivity for the recognition of emotional states, higher levels of paranoia were linked to a performance deficit on emotion perception tasks. The deficits in emotion perception may reflect the increased skepticism and scrutiny associated with posed emotion tasks (Davis & Gibson, 2000). Research should begin to focus on the underlying mechanisms of emotion perception deficits in paranoia.