Social isolation is common among individuals with schizophrenia spectrum and other psychotic disorders. Research indicates that social isolation relates to poorer mental health outcomes, depression, and negative symptoms, with less known about its relationship with positive symptoms. This study examined depression as a mediator in the relationships between positive symptoms (i.e., hallucinations and delusions) and social isolation among an early treatment phase sample in the United States. Data were obtained from the Recovery After an Initial Schizophrenia Episode project of the National Institute of Mental Health’s Early Treatment Program. Participants (N = 404) included adults between ages 15 and 40 in a first episode of psychosis. Data were analyzed using structural equation modeling in Mplus (Version 8). The study showed that delusions (b = .095, SE = 0.04, p < .05) and hallucinations (b = .076, SE = 0.03, p < .01) were directly related to depression, and that both delusions (b = .129, SE = 0.06, p < .05) and depression (b = .254, SE = 0.09, p < .05) were directly related to social isolation. Findings of this study determined that depression functioned as a mediator in the relationships between positive symptoms and social isolation. Targeting psychosis symptomatology and depression in treatment, improving social skills and social support networks, and considering the role of stigma in social isolation are of great importance in the prevention of poorer mental health outcomes.