Primary objectives: It has been proposed that dissociation plays a role in the aetiology of hallucinatory experiences. The present study examined the relationship between reports of auditory hallucinations and dissociative experiences in the daily lives of patients with psychosis. The influence of everyday stressors on dissociation and on the hypothesised relationship between dissociation and hallucinatory experiences was also investigated. Finally, this study examined the association between hallucinations and other non‐dissociative dysfunctional strategies used to suppress unpleasant mental events (i.e. experiential avoidance).Method: Forty‐two patients with a diagnosis of schizophrenia spectrum disorder and 23 healthy controls were studied for six days using the Experience Sampling Method (ESM), a structured self‐assessment diary technique.Results: Patients who hallucinated during the assessment period (n = 21) reported elevated levels of dissociation compared to non‐hallucinating patients and healthy controls. Within the hallucinating patient group, auditory hallucinations were significantly predicted by both dissociation and experiential avoidance, although only the effect of dissociation remained significant after controlling for comorbid paranoia. Dissociation predicted the occurrence of auditory hallucinations especially under high stress. Hallucinating patients also reported a greater increase in dissociation in response to minor daily life stress compared to clinical and non‐clinical controls.Conclusions: These results further support the link between auditory hallucinations and experiences of dissociative detachment, and might inform future investigations into the mechanisms underlying this association. Interventions designed to reduce dissociation should be studied as potential treatments for auditory hallucinations.