Individuals with body dysmorphic disorder (BDD) experience elevated social avoidance, both as a consequence and independent of BDD concerns. To explore how social avoidance relates to the long-term course of functioning for people with BDD, this prospective longitudinal study evaluated the hypothesis that initial social avoidance would predict changes in psychosocial functioning over 3 years, such that greater initial social avoidance would predict worsening functioning. At intake, individuals with BDD (N = 200) completed measures of social avoidance independent of BDD, social avoidance due to BDD or any other source, overall psychosocial functioning, and psychosocial functioning in specific domains. Overall and specific functioning was prospectively evaluated at three subsequent yearly follow-up assessments. Mixed model analyses evaluated the relation between baseline social avoidance and changes in functioning. Results provided mixed support for hypotheses, indicating that higher baseline social avoidance independent of BDD predicted worsening functioning in two of the four overall functioning indices and in both specific domains—interpersonal relationship quality and work/academic/household functioning. Higher global social avoidance (due to BDD or any other source) predicted poorer overall functioning for two of the four global functioning indices but did not predict functioning in either specific domain. Social avoidance, both related and unrelated to body image, might play an important role in the trajectory of psychosocial functioning for people with BDD.