We examine the effects of social trust on the local bias of individual investors. Using the trading records of Chinese retail investors, we find that investors with higher trust exhibit lower local bias in their stock portfolios, and this pattern holds under various robustness tests. We further show that trust helps accomplish greater portfolio diversification and reduces familiarity-based investment bias in general. These findings suggest that trust plays an important role in individual investors’ financial decisions, especially when they face unfamiliar investment opportunities.