The present study aimed to examine empathy in individuals with schizotypy and to explore whether empathy mediates the associations between schizotypy traits and social functioning in college students. 1083 (376 males, mean age 18.78 ᰮ86 years) Chinese university students completed questionnaires measuring empathy, social functioning, and schizotypy. Participants were categorized into four groups based on their scores on the Chapman Psychosis Proneness scales: mixed schizotypy, positive schizotypy, negative schizotypy, and healthy controls. Participants in the negative schizotypy group reported significantly poorer scores on both affective and cognitive empathy than those in the positive schizotypy and healthy control groups. The mixed schizotypy group showed lower affective empathy than the healthy control group. Scores on both cognitive and affective empathy in the positive schizotypy group were similar to those in the healthy control group. In addition, cognitive empathy was found to be a partial mediator of the association between negative schizotypy traits and social functioning. Results suggest that while individuals with negative schizotypy have deficits in empathy, individuals with positive schizotypy show empathy abilities comparable to that of healthy controls. Moreover, only cognitive empathy partially mediated the relationship between negative schizotypy and social functioning.