We wished to replicate evidence that an experimental paradigm of speech illusions is associated with psychotic experiences. Fifty-four patients with a first episode of psychosis (FEP) and 150 healthy subjects were examined in an experimental paradigm assessing the presence of speech illusion in neutral white noise. Socio-demographic, cognitive function and family history data were collected. The Positive and Negative Syndrome Scale (PANSS) was administered in the patient group and the Structured Interview for Schizotypy-Revised (SIS-R), and the Community Assessment of Psychic Experiences (CAPE) in the control group. Patients had a much higher rate of speech illusions (33.3% versus 8.7%, ORadjusted: 5.1, 95% CI: 2.3-11.5), which was only partly explained by differences in IQ (ORadjusted: 3.4, 95% CI: 1.4-8.3). Differences were particularly marked for signals in random noise that were perceived as affectively salient (ORadjusted: 9.7, 95% CI: 1.8-53.9). Speech illusion tended to be associated with positive symptoms in patients (ORadjusted: 3.3, 95% CI: 0.9-11.6), particularly affectively salient illusions (ORadjusted: 8.3, 95% CI: 0.7-100.3). In controls, speech illusions were not associated with positive schizotypy (ORadjusted: 1.1, 95% CI: 0.3-3.4) or self-reported psychotic experiences (ORadjusted: 1.4, 95% CI: 0.4-4.6). Experimental paradigms indexing the tendency to detect affectively salient signals in noise may be used to identify liability to psychosis.