Background: Deficits in emotion processing are thought to underlie the key negative symptoms flat affect and anhedonia observed in psychotic disorders. This study investigated emotional experience and social behavior in the realm of daily life in a sample of patients with schizophrenia and schizoaffective disorder, stratified by level of negative symptoms. Methods: Emotional experience and behavior of 149 patients with schizophrenia and schizoaffective disorder and 143 controls were explored using the Experience Sampling Method. Results: Patients reported lower levels of positive and higher levels of negative affect compared with controls. High negative symptom patients reported similar emotional stability and capacity to generate positive affect as controls, whereas low negative symptom patients reported increased instability. All participants displayed roughly comparable emotional responses to the company of other people. However, in comparison with controls, patients showed more social withdrawal and preference to be alone while in company, particularly the high negative symptom group. Conclusions: This study revealed no evidence for a generalized hedonic deficit in patients with psychotic spectrum disorders. Lower rather than higher levels of negative symptoms were associated with a pattern of emotional processing which was different from healthy controls.