The positive symptoms of psychosis largely involve the experience of illusory social actors, and yet our current measures of social cognition, at best, only weakly predict their presence. We review evidence to suggest that the range of current approaches in social cognition is not sufficient to explain the fundamentally social nature of these experiences. We argue that social agent representation is an important organizing principle for understanding social cognition and that alterations in social agent representation may be a factor in the formation of delusions and hallucination in psychosis. We evaluate the feasibility of this approach in light of clinical and nonclinical studies, developmental research, cognitive anthropology, and comparative psychology. We conclude with recommendations for empirical testing of specific hypotheses and how studies of social cognition could more fully capture the extent of social reasoning and experience in both psychosis and more prosaic mental states.