Despite accumulating evidence that patients with schizophrenia perform poorly in mentalising tasks, doubts remain about the primacy of the role played by defective mentalising in schizophrenia. This study investigated the relationship between mentalising ability and self-reported schizotypal traits in non-clinical adults who reported no history of psychiatric illness in order to test two counter-proposals: (1) defective mentalising is a primary cause of psychotic symptoms in schizophrenia; and (2) defective mentalising in schizophrenia is a secondary consequence of the chronic asociality that is typical of general psychiatric illness. Mentalising ability was tested using a false-belief picture sequencing task that has been used elsewhere to demonstrate poor mentalising in patients with schizophrenia. Evidence of selective mentalising deficits in high schizotypal non-clinical subjects discounted the view that defective mentalising is restricted to psychiatric illness and strengthened the case for continuity models of psychosis-proneness. Furthermore, evidence that poor mentalisers in the normal population are more likely to self-report psychotic-like traits, as well as asocial or idiosyncratic behaviours, refuted suggestions that defective mentalising is linked solely to asocial symptomatology and supported the view that defective mentalising may have a fundamental role to play in the explanation of psychotic symptoms. In order to specify what that role might be, alternative theoretical accounts of defective mentalising were tested. Neither executive planning deficits nor failure to inhibit cognitively salient inappropriate information could adequately explain the pattern of selective mentalising deficits found in high schizotypal non-clinical subjects. Our findings suggest that there exists a domain-specific cognitive module that is dedicated to inferring and representing mental states which, when dysfunctional, causes defective mentalising that manifests phenomenologically in psychotic-like traits and impoverished social awareness of variable expression and ranging severity.