•We tested for reduced visual attention to salient facial features in schizophrenia.•Visual attention did not differ between schizophrenia and healthy controls.•Visual attention mediated between paranoia and correct emotion recognition.•The study supports a vigilance-avoidance hypothesis of paranoia. The vigilance-avoidance hypothesis of paranoia states that in paranoia visual attention is shifted away from threat-related stimuli. This may be an explanation for reduced scanning of salient facial features in psychosis and subsequently impaired emotion recognition. Here, we explored whether higher levels of paranoia would predict reduced visual attention to salient facial features and impaired emotion recognition and whether reduced visual attention to salient facial features mediates the association between paranoia and errors in emotion recognition. Participants with schizophrenia (SZ, n = 22) and healthy controls (HC, n = 19) completed questionnaire assessments of paranoia and negative symptoms and conducted an emotion recognition task comprised of dynamic facial stimuli. Additionally, visual attention (number of fixations) to salient facial features was assessed using eye-tracking. SZ made more errors in affect recognition than HC. Visual attention to salient facial features did not differ between SZ and HC but significantly mediated the significant association between paranoia and errors in the emotion recognition task in the complete sample. Negative symptoms also predicted errors in emotion recognition but this association was not mediated by visual attention. Our findings are in line with the avoidance-assumption of a vigilance-avoidance hypothesis of paranoia, in which correct facial emotion recognition is prevented due to an avoidance of salient facial features.