Against the background of a major public health emergency, this paper examines the impact of this event on stock market risk in China from the perspective of the public’s risk perception bias. This paper measures the public’s risk perception bias through the susceptible-infected-recovered (SIR) model and text analysis and examines the impact mechanism of risk perception bias on stock market risk at both the market and industry levels. The empirical results show that risk perception bias significantly exacerbates stock market risk at both the market and industry levels, and that the effect is particularly significant during the period with high event risk. Meanwhile, this paper finds that investor attention plays an important mediating role in the relationship between risk perception bias and stock market risk, while its mediating effect is significant only during the period with high event risk. Finally, the impact of risk perception bias on stock market risk, as well as the mediating role of investor attention, vary across different sectors. These findings suggest that the public’s subjective perception of event risk deviates from the objective event risk, and the resulting irrational investment exacerbates the instability of the financial market during major public health emergencies.