This paper reports two studies bearing upon the role of defensive projection in paranoid conditions. The first study considered a proposal explaining the mechanics of projection. People who use their social environment for standards of comparison in making self-evaluations may distort the social comparison process in the case of a threatening characteristic. False attribution or selective perception may allow a social standard to be shifted toward the negative attribute. Given the modified standard, the characteristic can be minimized or denied. Evidence supporting this hypothesis was found when high projectors (among normals) reported greater use of social comparison in reaching self-evaluation judgments concerning negative qualities. The second study considered the clinical implications of the proposition that defensive projection, defined this way, would be found among those who are more heavily invested in their social environment. It was predicted that reactive paranoid schizophrenics, identified by greater premorbid commitment to their social environment, would use projection; process paranoid schizophrenics, having a greater premorbid history of social withdrawal, would not. This prediction was confirmed. Process paranoids demonstrated the most idiosyncratic free associations to verbal cues, suggesting the autistic (self-preoccupied) quality of their thinking and delusions.