Psychoticism is a multidimensional personality construct involving odd or eccentric behavior, quasi-psychotic experiences, mistrust, interpersonal detachment, and liability for schizophrenia-spectrum disorders, as well as significant distress. Recent advances suggest it can be understood as a dimension that is continuously distributed in the population, leading to questions about factors that contribute to distress and dysfunction among people with a schizotypal liability. We investigated in a large nonclinical sample of young adults whether associations between psychoticism and psychological distress would increase in the presence of threatening beliefs. In our study (N = 2127), we found that the association between psychoticism and psychological distress is moderated by threatening beliefs including self-criticism, fear of compassion, and socially prescribed perfectionism. These results suggest that distress increases among people with schizotypal traits in the context of negative beliefs about self and others. We discuss implications for clinical practice and directions for further research.