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Background: The COVID-19 pandemic has increased psychological stress among adolescents, and the relation between perceived stress (PS) and psychotic-like experiences (PLEs) has been well-established. However, little is known about the role of family functioning (FF) in this relation, especially when adolescents experienced the extended lockdown period with family members. Methods: A total of 4807 adolescents completed this retrospective paper-and-pencil survey after school reopening between May 14th and June 6th, 2020 in Hunan Province, China. We measured PS with the Perceived stress scale (PSS-10), PLEs with the eight positive items from Community Assessment of Psychic Experiences (CAPE-8), and FF with the Family APGAR scale. We conducted subgroup analysis based on three FF levels (good, moderate, and poor) determined by previous studies. Finally, correlation and moderation analysis were performed to detect the effect of FF in the relation between PS and PLEs after adjusting for demographic variables. Results: Adolescents with poor FF had higher levels of PS and higher prevalence of PLEs compared to those with good FF (both p < 0.001). FF was negatively associated with both PS (r = −0.34, p < 0.001) and PLEs (r = −0.29, p < 0.001). Higher FF significantly attenuated the effect of PS on PLEs after adjusting for sex and age (effect = −0.011, bootstrap 95% CI -0.018, −0.005). Conclusion: Our findings indicate that well-functioned family could protect against stress-induced PLEs among adolescents during this crisis. Thus family system could be an early interventional target for distressing psychotic-like experiences in youngsters.