With the ongoing COVID-19 pandemic, there is a growing need for assessing the psychological costs of social isolation (SI). We examine whether the balcony party can help people cope better with SI during the COVID-19 outbreak. We examined the psychological effects of SI on persons in Israel and Italy between March 23th, 2020 and April 2th, 2020. A total of 303 quarantined persons responded to a Web-based survey. We found that the effect of balcony parties on the psychological costs of SI is dependent on the level of social isolation. Those who experienced high levels of SI perceived the balcony parties as more beneficial in inducing positive affect and reducing negative affect in comparison to those who experienced low levels of SI. The opposite pattern was observed when individuals were asked about their participation in these parties: individuals with high levels of SI experienced balcony parties as less beneficial than similar pre-outbreak gathering events, while individuals with low levels of social isolation showed an opposite pattern. Finally, for those with high SI, balcony parties did not meet the expectation of creating feelings of communal solidarity. However, a discrepancy between high SI expectations and experience was not found for those with low SI. Our findings demonstrate that the balcony parties are beneficial in reducing the emotional cost of social isolation – but only for those who feel low levels of SI. The fact that individuals with high levels of SI expected more out of these parties suggests the need to develop interventions aimed at optimizing their expectations. As society enters a new period in which the costs of social distancing may be higher, our findings are valuable for understanding the psychological battle that individuals face while in social isolation.​