The Collaborative International Dictionary of English v.0.48:

paranoia \par`a*noi"a\ (p[a^]r`[.a]*noi"[.a]), n. [NL., fr. Gr.
   para`noia.]
   1. (Med.) A chronic form of insanity characterized by very
      gradual impairment of the intellect, systematized
      delusion, and usually by delusions of persecution or
      mandatory delusions producing homicidal tendency. In its
      mild form paranoia may consist in the well-marked
      crotchetiness exhibited in persons commonly called
      "cranks." Paranoiacs usually show evidences of bodily and
      nervous degeneration, and many have hallucinations, esp.
      of sight and hearing.
      [Webster 1913 Suppl.]

   2. Unwarranted suspicion of the motives of others; -- used
      colloquially in a non-technical sense. [Colloq.]
      [PJC]

WordNet (r) 3.0 (2006):

paranoia
    n 1: a psychological disorder characterized by delusions of
         persecution or grandeur