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There have been decades of research on the usability and educational value of augmented reality. However, less is known about how augmented reality affects social interactions. The current paper presents three studies that test the social psychological effects of augmented reality. Study 1 examined participants’ task performance in the presence of embodied agents and replicated the typical pattern of social facilitation and inhibition. Participants performed a simple task better, but a hard task worse, in the presence of an agent compared to when participants complete the tasks alone. Study 2 examined nonverbal behavior. Participants met an agent sitting in one of two chairs and were asked to choose one of the chairs to sit on. Participants wearing the headset never sat directly on the agent when given the choice of two seats, and while approaching, most of the participants chose the rotation direction to avoid turning their heads away from the agent. A separate group of participants chose a seat after removing the augmented reality headset, and the majority still avoided the seat previously occupied by the agent. Study 3 examined the social costs of using an augmented reality headset with others who are not using a headset. Participants talked in dyads, and augmented reality users reported less social connection to their partner compared to those not using augmented reality. Overall, these studies provide evidence suggesting that task performance, nonverbal behavior, and social connectedness are significantly affected by the presence or absence of virtual content.