Paranoia is a psychological disorder characterized by delusions of persecution or grandeur.

People with paranoia suffer from irrational fears that are not about a specific object, but about their surroundings or how they are perceived by their surroundings and cannot let go of things that happen to them.

People with paranoia have a decreased ability to function in normal life, when paranoia gets extremely bad it turns into a delusion of persecution and pretty much eliminates the ability to function in normal life.

Extreme paranoia is usually a symptom of a larger disorder, the most widely known is schizophrenia. Paranoia can sometimes occur in a major depression, because sometimes depressed people think the whole world is against them.
Paranoia is a mental disorder, that includes an unfounded belief of persecution, thinking people are after you, accusing people of things that you aren't sure of.