Loneliness is common in youth and associated with a significantly increased risk of psychological disorders. Although loneliness is strongly associated with psychosis, its relationship with psychosis proneness is unclear. Our aim in this paper was to test the hypothesis that loneliness and schizotypal traits, conveying risk for schizophrenia spectrum disorders, are similar but separate constructs. Pooling data from two non-clinical student samples (N = 551) we modeled the structure of the relationship between loneliness and trait schizotypy. Loneliness was assessed with the University of California, Los Angeles Loneliness Scale (UCLA-3), whilst negative (Social Anhedonia) and positive (Perceptual Aberrations) schizotypal traits were assessed with the Wisconsin Schizotypy Scales-Brief (WSS-B). Fit statistics indicated that the best fitting model of UCLA-3 scores comprises three correlated factors (Isolation, Related Connectedness, and Collective Connectedness), consistent with previous reports. Fit statistics for a two factor model of positive and negative schizotypy were excellent. Next, bi-factor analysis was used to model a general psychopatholgy factor (p) across the three loneliness factors and separate negative and positive schizotypy traits. The results showed that all items (except 1) co-loaded on p. However, with the influence of p removed, additional variance remained within separate sub-factors, indicating that loneliness and negative and positive trait schizotypy are distinct and separable constructs. Similarly, once shared variance with p was removed, correlations between sub-factors of loneliness and schizotypal traits were non-significant. These findings have important clinical implications since they suggest that loneliness should not be conflated with the expression of schizotypy. Rather, loneliness needs to be specifically targeted for assessment and treatment in youth at risk for psychosis.