In day-to-day social interactions, we frequently use cues and contextual knowledge to make perceptual decisions regarding the presence or absence of threat in facial expressions. Such perceptual decisions are often made in socially evaluative contexts. However, the influence of such contexts on perceptual discrimination of threatening and neutral expressions has not been examined empirically. Furthermore, it is unclear how individual differences in anxiety interact with socially evaluative contexts to influence threat-related perceptual decision-making. In the present study, participants completed a 2-alternative forced choice perceptual decision-making task in which they used threatening and neutral cues to discriminate between threatening and neutral faces while being socially evaluated by purported peers or not. Perceptual sensitivity and reaction time were measured. Individual differences in state anxiety were assessed immediately after the task. In the presence of social evaluation, higher state anxiety was associated with worse perceptual sensitivity, i.e., worse discrimination of threatening and neutral faces. These findings suggest that individual differences in anxiety interact with social evaluation to impair the use of threatening cues to discriminate between threatening and neutral expressions. Such impairment in perceptual decision-making may contribute to maladaptive social behavior that often accompanies evaluative social contexts.