Medications for schizophrenia are often used, especially when positive symptoms are present. Both first-generation antipsychotics and second-generation antipsychotics may be useful. Cognitive behavioral therapy has also been used.

Psychotherapies that may be helpful in delusional disorder include individual psychotherapy, cognitive-behavioral therapy (CBT), and family therapy.

A challenge in the treatment of delusional disorders is that most patients have limited insight, and do not acknowledge that there is a problem. Most patients are treated as out-patients, although hospitalization may be required in some cases if there is a risk of harm to self or others. Individual psychotherapy is recommended rather than group psychotherapy, as patients are often quite suspicious and sensitive. Antipsychotics are not well tested in delusional disorder, but they do not seem to work very well, and often have no effect on the core delusional belief. Antipsychotics may be more useful in managing agitation that can accompany delusional disorder. Until further evidence is found, it seems reasonable to offer treatments which have efficacy in other psychotic disorders.

Psychotherapy for patients with delusional disorder can include cognitive therapy which is conducted with the use of empathy. During the process, the therapist can ask hypothetical questions in a form of therapeutic Socratic questioning. This therapy has been mostly studied in patients with the persecutory type. The combination of pharmacotherapy with cognitive therapy integrates treating the possible underlying biological problems and decreasing the symptoms with psychotherapy as well. Psychotherapy has been said to be the most useful form of treatment because of the trust formed in a patient and therapist relationship.

Supportive therapy has also been shown to be helpful. Its goal is to facilitate treatment adherence and provide education about the illness and its treatment.

Furthermore, providing social skills training has helped many persons. It can promote interpersonal competence as well as confidence and comfort when interacting with those individuals perceived as a threat.

Insight-oriented therapy is rarely indicated or contraindicated; yet there are reports of successful treatment. Its goals are to develop therapeutic alliance, containment of projected feelings of hatred, impotence, and badness; measured interpretation as well as the development of a sense of creative doubt in the internal perception of the world. The latter requires empathy with the patient's defensive position.

Paranoia is an instinct or thought process believed to be heavily influenced by anxiety or fear, often to the point of delusion and irrationality. Paranoid thinking typically includes persecutory, or beliefs of concerning a perceived threat towards oneself (e.g. ""Everyone is out to get me"", which is an American parochial phrase). Paranoia is distinct from phobias, which also involve irrational fear, but usually no blame. Making false accusations and the general distrust of others also frequently accompany paranoia. For example, an incident most people would view as an accident or coincidence, a paranoid person might believe was intentional. Paranoia is a central symptom of psychosis. It is also a matter of personal tolerance for the individual that might be in conflict with psychiatric diagnoses.

Social circumstances appear to be highly influential on paranoid beliefs. Based on data collected by means of a mental health survey distributed to residents of Ciudad Juárez, Chihuahua (in Mexico) and El Paso, Texas (in the United States), paranoid beliefs seem to be associated with feelings of powerlessness and victimization, enhanced by social situations. Potential causes of these effects included a sense of believing in external control, and mistrust which can be strengthened by lower socioeconomic status. Those living in a lower socioeconomic status may feel less in control of their own lives. In addition, this study explains that females have the tendency to believe in external control at a higher rate than males, potentially making females more susceptible to mistrust and the effects of socioeconomic status on paranoia.

Emanuel Messinger reports that surveys have revealed that those exhibiting paranoia can evolve from parental relationships and dis-trustworthy environments. These environments could include being very disciplinary, stringent, and unstable. It was even noted that, "indulging and pampering (thereby impressing the child that he is something special and warrants special privileges)," can be contributing backgrounds. Experiences likely to enhance or manifest the symptoms of paranoia include increased rates of disappointment, stress, and a hopeless state of mind.

Discrimination has also been reported as a potential predictor of paranoid delusions. Such reports that paranoia seemed to appear more in older patients who had experienced higher levels of discrimination throughout their lives. In addition to this it has been noted that immigrants are quite susceptible to forms of psychosis. This could be due to the aforementioned effects of discriminatory events and humiliation.

Examples from a 295-subject study in Lithuania showed that the most common religious delusions were being a saint (in women) and being God (in men).

In one study of 193 people who had previously been admitted to hospital and subsequently diagnosed with schizophrenia, 24% were found to have religious delusions.

A 1999 study identified that religious delusions were often present or expressed in persons with forensic committal to a psychiatric unit.

A 2012 paper suggested that, when compared with experiences today, psychiatric conditions associated with psychotic spectrum symptoms may be possible explanations for some revelatory driven experiences and activities such as those of Abraham, Moses, Jesus, and Saint Paul. However, the paper admits that the study was not aimed to deny supernatural elements, nor was it conclusive on whether their experiences were delusional in part or not at all.

Ideas of reference and delusions of reference describe the phenomenon of an individual's experiencing innocuous events or mere coincidences and believing they have strong personal significance. It is "the notion that everything one perceives in the world relates to one's own destiny".

In psychiatry, delusions of reference form part of the diagnostic criteria for psychotic illnesses such as schizophrenia, delusional disorder, bipolar disorder (during the elevated stages of mania), as well as schizotypal personality disorder. To a lesser extent, it can be a hallmark of paranoid personality disorder. Such symptoms can also be caused by intoxication, especially with hallucinogens or stimulants like methamphetamine.

Because of reduced levels of trust, there can be challenges in treating PPD. However, psychotherapy, antidepressants, antipsychotics and anti-anxiety medications can play a role when an individual is receptive to intervention.

Explaining the causes of delusions continues to be challenging and several theories have been developed. One is the genetic or biological theory, which states that close relatives of people with delusional disorder are at increased risk of delusional traits. Another theory is the dysfunctional cognitive processing, which states that delusions may arise from distorted ways people have of explaining life to themselves. A third theory is called motivated or defensive delusions. This one states that some of those persons who are predisposed might suffer the onset of delusional disorder in those moments when coping with life and maintaining high self-esteem becomes a significant challenge. In this case, the person views others as the cause of their personal difficulties in order to preserve a positive self-view.

This condition is more common among people who have poor hearing or sight. Also, ongoing stressors have been associated with a higher possibility of developing delusions. Examples of such stressors are immigration, low socioeconomic status, and even possibly the accumulation of smaller daily hassles.

When the focus is to remedy some injustice by legal action, they are sometimes called "querulous paranoia".

In cases where reporters of stalking behavior have been judged to be making false reports, a majority of them were judged to be delusional.

Reports have stated that a similar phenomenon to "folie à deux" had been induced by the military incapacitating agent BZ in the late 1960s.

Grandiose delusions (GD), delusions of grandeur, expansive delusions also known as megalomania are a subtype of delusion that occur in patients suffering from a wide range of psychiatric diseases, including two-thirds of patients in manic state of bipolar disorder, half of those with schizophrenia, patients with the grandiose subtype of delusional disorder, and a substantial portion of those with substance abuse disorders. GDs are characterized by fantastical beliefs that one is famous, omnipotent, wealthy, or otherwise very powerful. The delusions are generally fantastic and typically have a religious, science fictional, or supernatural theme. There is a relative lack of research into GD, in contrast to persecutory delusions and auditory hallucinations. About 10% of healthy people experience grandiose thoughts but do not meet full criteria for a diagnosis of GD.

According to the Mayo Clinic, it is best to start receiving treatment for paranoid schizophrenia as early as possible and to maintain the treatment throughout life. Continuing treatment will help keep the serious symptoms under control and allow the person to lead a more fulfilling life. This illness is typically unpreventable.

It has a strong hereditary component with a first degree parent or sibling. There is some possibility that there are environmental influences including "prenatal exposure to a viral infection, low oxygen levels during birth (from prolonged labor or premature birth), exposure to a virus during infancy, early parental loss or separation, and verbal, physical or sexual abuse in childhood". Eliminating any of these factors could help reduce an individual's future risk of developing paranoid schizophrenia.

The article "Cotard's syndrome: A Review" (2010) reports successful pharmacological treatments (mono-therapeutic and multi-therapeutic) using antidepressant, antipsychotic, and mood stabilizing drugs; likewise, with the depressed patient, electroconvulsive therapy (ECT) is more effective than pharmacotherapy. Cotard syndrome resulting from an adverse drug reaction to valacyclovir is attributed to elevated serum concentration of one of valacyclovir's metabolites, 9-carboxymethoxymethylguanine (CMMG). Successful treatment warrants cessation of the drug, valacyclovir. Hemodialysis was associated with timely clearance of CMMG and resolution of symptoms.

This syndrome is most commonly diagnosed when the two or more individuals concerned live in proximity and may be socially or physically isolated and have little interaction with other people. Various sub-classifications of "folie à deux" have been proposed to describe how the delusional belief comes to be held by more than one person :

- Folie imposée is where a dominant person (known as the 'primary', 'inducer' or 'principal') initially forms a delusional belief during a psychotic episode and imposes it on another person or persons (known as the 'secondary', 'acceptor' or 'associate') with the assumption that the secondary person might not have become deluded if left to his or her own devices. If the parties are admitted to hospital separately, then the delusions in the person with the induced beliefs usually resolve without the need of medication.

- Folie simultanée describes either the situation where two people considered to suffer independently from psychosis influence the content of each other's delusions so they become identical or strikingly similar, or one in which two people "morbidly predisposed" to delusional psychosis mutually trigger symptoms in each other.

Folie à deux and its more populous cousins are in many ways a psychiatric curiosity. The current Diagnostic and Statistical Manual of Mental Disorders states that a person cannot be diagnosed as being delusional if the belief in question is one "ordinarily accepted by other members of the person's culture or subculture" (see entry for delusion). It is not clear at what point a belief considered to be delusional escapes from the "folie à..." diagnostic category and becomes legitimate because of the number of people holding it. When a large number of people may come to believe obviously false and potentially distressing things based purely on hearsay, these beliefs are not considered to be clinical delusions by the psychiatric profession and are labelled instead as mass hysteria.

Delusional disorders are uncommon in psychiatric practice, though this may be an underestimation due to the fact that those afflicted lack insight and thus avoid psychiatric assessment. The prevalence of this condition stands at about 24 to 30 cases per 100,000 people while 0.7 to 3.0 new cases per 100,000 people are reported every year. Delusional disorder accounts for 1–2% of admissions to inpatient mental health facilities. The incidence of first admissions for delusional disorder is lower, from 0.001–0.003%.

Delusional disorder tends to appear in middle to late adult life, and for the most part first admissions to hospital for delusional disorder occur between age 33 and 55. It is more common in women than men, and immigrants seem to be at higher risk.

Research suggests that the severity of the delusions of grandeur is directly related to a higher self-esteem in individuals and inversely related to any individual’s severity of depression and negative self-evaluations. Lucas "et al." found that there is no significant gender difference in the establishment of grandiose delusion. However, there is a claim that ‘the particular component of Grandiose delusion’ may be variable across both genders. Also, it had been noted that the presence of GDs in people with at least grammar or high school education was greater than lesser educated persons. Similarly, the presence of grandiose delusions in individuals who are the eldest is greater than in individuals who are the youngest of their siblings.

Current cognitive neuropsychology research points toward a two-factor approach to the cause of monothematic delusions. The first factor being the anomalous experience—often a neurological defect—which leads to the delusion, and the second factor being an impairment of the belief formation cognitive process.

As an example of one of these first factors, several studies point toward Capgras delusion being the result of a disorder of the affect component of face perception. As a result, while the person can recognize their spouse (or other close relation) they do not feel the typical emotional reaction, and thus the spouse does not seem like the person they once knew.

As studies have shown, these neurological defects are not enough on their own to cause delusional thinking. An additional second factor—a bias or impairment of the belief formation cognitive process—is required to solidify and maintain the delusion. Since we do not currently have a solid cognitive model of the belief formation process, this second factor is still somewhat of an unknown.

Some research has shown that delusional people are more prone to jumping to conclusions, and thus they would be more likely to take their anomalous experience as veridical and make snap judgments based on these experiences. Additionally, studies have shown that they are more prone to making errors due to matching bias—indicative of a tendency to try and confirm the rule. These two judgment biases help explain how delusion-prone people could grasp onto extreme delusions and be very resistant to change.

Researchers claim this is enough to explain the delusional thinking. However, other researchers still argue that these biases are not enough to explain why they remain completely impervious to evidence over time. They believe that there must be some additional unknown neurological defect in the patient's belief system (probably in the right hemisphere).

Research suggests that paraphrenics respond well to antipsychotic drug therapy if doctors can successfully achieve sufficient compliance. Herbert found that Stelazine combined with Disipal was an effective treatment. It promoted the discharging of patients and kept discharged patients from being readmitted later. While behavior therapy may help patients reduce their preoccupation with delusions, psychotherapy is not currently of primary value.

The Truman Show delusion, informally known as Truman syndrome, is a type of delusion in which the person believes that their lives are staged reality shows, or that they are being watched on cameras. The term was coined in 2008 by brothers Joel Gold and Ian Gold, a psychiatrist and a neurophilosopher, respectively, after the film "The Truman Show".

The Truman Show delusion is not officially recognized nor listed in the "Diagnostic and Statistical Manual of the American Psychiatric Association".

Grandiosity refers to an unrealistic sense of superiority—a sustained view of oneself as better than others that causes the narcissist to view others with disdain or as inferior—as well as to a sense of uniqueness: the belief that few others have anything in common with oneself and that one can only be understood by a few or very special people. It also occurs in reactive attachment disorder.

Grandiosity is chiefly associated with narcissistic personality disorder, but also commonly features in manic or hypomanic episodes of bipolar disorder.

Paranoid schizophrenia is an illness that typically requires lifelong treatment with neuroleptics to allow someone to have a relatively stable and normal lifestyle. In order to be successfully treated, a person with schizophrenia should seek help from family or primary care doctors, psychiatrists, psychotherapists, pharmacists, family members, case workers, psychiatric nurses, or social workers, provided he or she is not unable to do so, due to many people with schizophrenia having the inability to accept their condition. Non-compliance with neuroleptics may also occur if the patient considers the side effects (such as extrapyramidal symptoms) to be more debilitating than the condition itself. The main options that are offered for the treatment of paranoid schizophrenia are the following: neuroleptics, psychotherapy, hospitalization, electroconvulsive therapy, and vocational skills training.

There are many different types of disorders that have similar symptoms to paranoid schizophrenia. There are tests that psychiatrists perform to achieve a correct diagnosis. They include "psychiatric evaluation, in which the doctor or psychiatrist will ask a series of questions about the patient's symptoms, psychiatric history, and family history of mental health problems; medical history and exam, in which the doctor will ask about one's personal and family health history and will also perform a complete physical examination to check for medical issues that could be causing or contributing to the problem; laboratory tests in which the doctor will order simple blood and urine tests can rule out other medical causes of symptoms".

There are side effects associated with antipsychotic medication. Neuroleptics can cause high blood pressure and high cholesterol. Many people who take them exhibit weight gain and have a higher risk of developing diabetes.

In rare cases, individuals may believe that other people have transformed into animals. This has been termed "lycanthropic intermetamorphosis" and "lycanthropy spectrum". A 2009 study reported that, after the consumption of the drug MDMA (Ecstasy), a man displayed symptoms of paranoid psychosis by claiming that his relatives had changed into various animals such as a boar, a donkey and a horse.

Individuals who develop paraphrenia have a life expectancy similar to the normal population. Recovery from the psychotic symptoms seems to be rare, and in most cases paraphrenia results in in-patient status for the remainder of the life of the patient. Patients experience a slow deterioration of cognitive functions and the disorder can lead to dementia in some cases, but this development is no greater than the normal population.