Many citizens distrust powerful societal institutions, and hold conspiracy theories about them. What are the implications of this suspicion of institutions for people’s social relationships? The current paper proposes that institutions have at least two functions to regulate citizens’ social relationships: providing people with a sense of safety, and providing models for group norms and values. Suspicion of institutions undermines both of these functions, and therefore yields a range of negative societal outcomes by impacting people’s interpersonal, within-group, and between-group relationships. More specifically, suspicion of institutions reduces trust between strangers, within-group cooperation, commitment, and prosocial behavior, and increases prejudice, intergroup conflict, polarization, and extremism. We conclude that institutional distrust and conspiracy theories erode the fabric of society.