Deficits in the perception of emotion are well documented in schizotypy. In part, individuals with high levels of schizotypy, relative to those with low levels of schizotypy, commit significantly more false-positive errors in perceiving threatening facial emotions. The hypervigilance hallucination hypothesis attempts to link these emotion perception deficits to hallucination proneness in schizotypy. This theory posits that false-perceptual experiences reflect an evolved tendency to commit false-positive errors, in order to avoid the costly consequences associated with false-negative errors. The present study set out to explore the relationship between one aspect of emotion perception – smile perception, and schizotypy factors, as a means of testing the hypervigilance hallucination hypothesis in schizotypy. To these ends, 211 university students (111 females and 100 males, mean age = 19.5 years; SD = 1.61) completed the Schizotypal Personality Questionnaire and a smile recognition task embedded within a signal detection paradigm. A positive correlation was found between schizotypy and false-positive errors, further implicating perceptual sensitivity and response bias in schizotypy, and providing support for the hypervigilance hallucination hypothesis. The relevance of these findings to schizophrenia is discussed.