This study empirically explored consumers’ response to the personalization–privacy paradox arising from the use of location-based mobile commerce (LBMC) and investigated the factors affecting consumers’ psychological and behavioral reactions to the paradox. A self-administered online consumer survey was conducted using a South Korean sample comprising those with experience using LBMC, and data from 517 respondents were analyzed. Using cluster analysis, consumers were categorized into four groups according to their responses regarding perceived personalization benefits and privacy risks: indifferent (n = 87), personalization oriented (n = 113), privacy oriented (n = 152), and ambivalent (n = 165). The results revealed significant differences across consumer groups in the antecedents and outcomes of the personalization–privacy paradox. Multiple regression analysis showed that factors influence the two outcome variables of the personalization–privacy paradox: internal conflict (psychological outcome) and continued use intention of LBMC (behavioral outcome). In conclusion, this study showed that consumer involvement, self-efficacy, and technology optimism significantly affected both outcome variables, whereas technology insecurity influenced internal conflict, and consumer trust influenced continued use intention. This study contributes to the current literature and provides practical implications for marketers and retailers aiming to succeed in the mobile commerce environment. •Explores psychological and behavioral outcomes of personalization-privacy paradox.•Identifies clusters based on privacy risk and personalization benefit perceptions.•The ambivalent group was the largest implying consumer dilemma in LBMC use.•The ambivalent group had the highest level of internal conflict and use intention.•Self-efficacy, involvement, and trust are key factors for stable LBMC use.