OBJECTIVE: The aim of this study was to determine whether individuals who experience transient cocaine-induced paranoia are vulnerable to psychosis. METHOD: The subjects were 20 cocaine-dependent men who had been using more than 5 g of cocaine per week and were undergoing substance abuse treatment; half reported binge-limited cocaine-induced paranoia. The men were assessed with the Perceptual Aberration Scale and the Magical Ideation Scale, self-report measures of symptoms thought to precede the development of functional psychosis. RESULTS: The combined scores on the Perceptual Aberration Scale and Magical Ideation Scale were strongly correlated with a history of cocaine- induced paranoia. The sensitivity, specificity, and positive and negative predictive power were 80.0%, 90.0%, 88.9%, and 81.8%, respectively. CONCLUSIONS: Heavy cocaine users who experience transient paranoia while intoxicated may be at higher risk for development of psychosis than cocaine users who do not experience paranoia.