I like my job, but my boss is narcissistic and paranoid

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I know how paranoia feels because I suffer from it, narcissism not so much; but my boss has a mixture of both. I don't want to lose this job. I actually enjoy it and the pay is above minimum. So my main goal is not to be fired.
My boss is very much into drama and emoting and I am struggling to deal with this. It seems that when I sympathize she thinks I am mocking her. When I try to engage I am being too familiar.
I'm tempted to go with binary communication - repetition and acknowledgment. I feel like I'm walking on eggshells. The thing is that I like her; I think she is struggling with her own problems. But I don't want to become too involved because I want to keep my job.
How do you deal with your boss's peculiarities? Any advice would be welcome.

Ann, I learned about bad bosses back when I was in the Navy--where it was possible for a boss to have his underlings thrown in the brig. The most important thing to do is not be heard unless you have something that needs to be said, or the boss says something to you, and then only answer questions or ask them--nothing more. The next most important thing is not to be seen unless necessary. A bully boss will pick on the easiest target, and that is the target who is most visible. Stay out of sight whenever possible. Balance this off with doing your job well and always staying busy, so the boss has no reason to talk to you. And always smile and be agreeable without saying anything unnecessary.

Good luck.

This reminds me of elementary school. Keep the teacher happy, but make sure she doesn't notice you. Why do all these cold people end up being in positions of authority? Survival of the fittest? I'm not sure . . . maybe survival of the quickest and the most blusterous. I thought people might mature in the adult world, but not so.
I need more cigarettes.

The boss's attention is normally given to the very best and very worst employees. Those in the middle range tend to receive less attention.

As far as why so many "cold" people wind up in positions of authority, the best managers will likely have better jobs, such as working for large corporations, though a lot of them are stinkers too.

Go get your smokes.

I had a boss like this once and I got myself fired through a silly mistake. My overarching mistake was thinking he was a human being with a soul.
I would strongly recommend looking out for another job just to keep your options open. You never know when this type of personality is going to strike.
Never be the one to tell him when things are going wrong. Lie and cover up if you have to.
Never argue with him. Always suck up and fawn over him even if it makes you sick. And keep out of his way.

I really like the job though. I want to keep it going as long as possible. I'm definitely going to have to do some ducking and weaving. But I will try to work on other options.