Theatre-based practices, such as improvisation, are frequently applied to simulate everyday social interactions. Although the improvisational context is acknowledged as fictional, realistic emotions may emerge, a phenomenon labelled the ‘paradox of fiction’. This study investigated how manipulating the context (real-life versus fictional) modulates psychophysiological reactivity to social rejection during dyadic interactions. We measured psychophysiological responses elicited during real-life (interview) and fictional (improvisation exercises) social rejections. We analysed the heart rate (HR), skin conductance, facial muscle activity, and electrocortical activity (electroencephalographic (EEG) alpha asymmetry) of student teachers (N = 39) during various social rejections (devaluing, interrupting, nonverbal rejection). All social rejections evoked negative EEG alpha asymmetry, a measure reflecting behavioural withdrawal motivation. Psychophysiological responses during real-life and fictional rejections correlated, and rejection type modified the responses. When comparing responses across all rejection types, facial muscle activity and EEG alpha asymmetry did not differ between real-life and fictional rejections, whereas HR decelerated and skin conductance increased during fictional rejections. These findings demonstrate that regardless of cognitive awareness of fictionality, relatively subtle social rejections elicited psychophysiological reactivity indicating emotional arousal and negative valence. These findings provide novel, biological evidence for the application of theatre-based improvisation to studying experientially everyday social encounters.