•Social connectedness, which typically protects against distress and the feelings of loneliness has been significantly disrupted by the COVID-19 pandemic.•Loneliness is a significant risk factor for mental health problems, especially psychosis.•Psychosis-risk and loneliness were significantly associated during the pandemic in the Croatian population.•Psychosis-proneness and social isolation are strongly associated with depression, anxiety, and stress. The present study investigated psychosocial predictors of psychosis-risk, depression, anxiety, and stress in Croatia during the COVID-19 pandemic. Given Croatia's recent transgenerational war trauma and the relative lack of available prodromal data, this study presents a unique opportunity to examine the impact of loneliness and other psychosocial factors on psychosis-risk and mental health in this population. 404 Croatian participants completed an anonymous online survey of physical and mental health questions. 48 participants met the criteria for elevated psychosis-risk on prodromal questionnaire (PQ-16). Loneliness had a significant impact on psychosis-risk. Exposure to trauma was associated with psychosis-risk and loneliness, while domestic abuse/violence was associated only with the distress surrounding psychotic-like symptoms. COVID concern was also associated with psychosis-risk. Lastly, the associations between psychosis-risk and depression, anxiety, and stress were robust. These findings highlight the important role of loneliness in psychosis-proneness in Croatia. Depression, anxiety, and stress were also closely related to elevated psychosis-risk. Loneliness is a highly salient issue for individuals with psychosis and it is important to target loneliness within a multi-faceted psychosocial intervention for those at risk for schizophrenia.