Persecutory (paranoid) delusions are a frequently observed clinical phenomenon. In recent years, an increasing volume of research has attempted to explain these types of beliefs in terms of psychological mechanisms. Theories have emphasized early experience, perceptual abnormalities, motivational factors, and information-processing deficits. In this article we review relevant findings, including our own studies of the role of causal attributions and theory of mind deficits. We propose a new integrative model that builds on this work. The core of the model is an account of the way that causal attributions influence self-representations, which in turn influence future attributions: the attribution--self-representation cycle. We argue that biases in this cycle cause negative events to be attributed to external agents and hence contribute to the building of a paranoid world view. These abnormalities are amenable to investigation by functional neuroimaging, and recent studies have implicated specific areas of neuroactivation. However, these findings do not necessarily suggest that paranoid delusions are entirely biological in origin, and there is evidence that adverse early experience may play a role in determining the development of a cognitive vulnerability to paranoid thinking.