Emotion regulation (ER) difficulties are ubiquitous among individuals with schizophrenia and have been hypothesized to contribute to stress sensitivity and exacerbation of psychotic symptoms in this population. However, the evidence supporting this link is equivocal, potentially due to previous studies’ reliance on retrospective assessments of ER and psychosis, as well as lack of consideration of putative moderators such as emotion awareness. To address these limitations, we employed experience sampling method using mobile electronic devices to investigate the links between momentary in vivo use of ER strategies (mER), emotion awareness, and psychotic symptoms during daily functioning. Fifty-four individuals with schizophrenia completed assessment of mER and psychotic symptoms, along with traditional retrospective measures of ER and symptoms. Use of mER suppression predicted significant increases in momentary experiences of thought insertion, mind reading, auditory and visual hallucinations. Use of mER reappraisal predicted significant increases in momentary experiences of suspiciousness, thought insertion, and mind reading. Emotion awareness, driven primarily by difficulties identifying feelings, moderated the impact of ER on psychotic symptoms. There were no associations between retrospective measures of ER and symptoms. Our results indicate that, among individuals with schizophrenia, emotion awareness significantly impacts the relationship between use of ER and exacerbations in psychotic symptoms during the course of daily functioning. Our results highlight the need to incorporate emotion awareness and regulation difficulties into the development of treatment models and interventions for psychosis. In addition, our results underscore the need to employ in vivo, high time-resolution assessment methods to study dynamic clinical phenomena such as ER and psychotic symptoms.