Objective: A detailed understanding of how individuals diagnosed with social anxiety disorder (SAD) respond physiologically under social-evaluative threat is lacking. Our aim was to isolate the specific components of public speaking that trigger fear in vulnerable individuals and best discriminate between SAD and healthy individuals. Method: Sixteen individuals diagnosed with SAD (DSM-IV-TR criteria) and 16 healthy individuals were enrolled in the study from December 2005 to March 2008. Subjects were asked to prepare and deliver a short speech in a virtual reality (VR) environment. The VR environment simulated standing center stage before a live audience and allowed us to gradually introduce social cues during speech anticipation. Startle eye-blink responses were elicited periodically by white noise bursts presented during anticipation, speech delivery, and recovery in VR, as well as outside VR during an initial habituation phase, and startle reactivity was measured by electromyography. Subjects rated their distress at 4 timepoints in VR using a 0-10 scale, with anchors being "not distressed" to "highly distressed." State anxiety was measured before and after VR with the Spielberger State-Trait Anxiety Inventory. Results: Individuals with SAD reported greater distress and state anxiety than healthy individuals across the entire procedure (P values < .005). Analyses of startle reactivity revealed a robust group difference during speech anticipation in VR, specifically as audience members directed their eye gaze and turned their attention toward participants (P < .05, Bonferroni-corrected). Conclusions: The VR environment is sufficiently realistic to provoke fear and anxiety in individuals highly vulnerable to socially threatening situations. Individuals with SAD showed potentiated startle, indicative of a strong phasic fear response, specifically when they perceived themselves as occupying the focus of others' attention as speech time approached. Potentiated startle under social-evaluative threat indexes SAD-related fear of negative evaluation.