Stress and abnormal stress response are associated with schizophrenia spectrum disorder (SSD), but the brain mechanisms linking stress to symptomatology remain unclear. In this study, we used a stress-based functional neuroimaging task, reverse-translated from preclinical studies, to test the hypothesis that abnormal corticolimbic processing of stressful threat anticipation is associated with psychosis and affective symptoms in SSD. Participants underwent an MRI-compatible ankle-shock task (AST) in which the threat of mild electrical shock was anticipated. We compared functional brain activations during anticipatory threat periods from N = 18 participants with SSD (10 M/8F) to those from N = 12 community controls (9 M/3F). After family-wise error correction, only one region, the ventral anterior cingulate cortex (vACC), showed significantly reduced activation compared with controls. vACC activation significantly correlated with clinical symptoms measured by the Brief Psychiatric Rating Scale total score (r = 0.54) and the psychosis subscale (r = 0.71), and inversely correlated with trait depression measured by the Maryland Trait and State Depression scale (r=-0.48). Deficient activation in vACC under stress of anticipated threat may lead to aberrant interpretation of such threat, contributing to psychosis and mood symptoms in SSD. This experimental paradigm has translational potential and may identify circuitry-level mechanisms of stress-related mental illness, leading to more targeted treatment.