Recent work has focused on the role of the environment in psychosis with emerging evidence that specific psychotic experiences are associated with specific types of adversity. One risk factor that has been often associated with psychosis is social isolation, with studies identifying isolation as an important feature of prodromal psychosis and others reporting that social networks of psychotic patients are smaller and less dense than those of healthy individuals. In the present study, we tested a prediction that social isolation would be specifically associated with formal thought disorder. 80 patients diagnosed with psychosis-spectrum disorder and 30 healthy participants were assessed for formal thought disorder with speech samples acquired during an interview that promoted personal disclosure and an interview targeting everyday topics. Social isolation was a highly significantly associated with formal thought disorder in the neutral interview and in the salient interview, even when controlling for comorbid hallucinations, delusions and suspiciousness. Hallucinations, delusions and suspiciousness were not associated with social isolation when formal thought disorder was controlled for. Formal thought disorder is robustly and specifically associated with social isolation. Social cognitive mechanisms and processes are discussed which may explain this relationship as well as implications for clinical practice and future research.