There remains a dearth of research on causal roles of perceived interracial competition on psychological outcomes. Towards this end, this research experimentally manipulated perceptions of group-level competition between Black and White individuals in the U.S. and tested for effects on negative psychological outcomes. In Study 1 (N = 899), participants assigned to the high interracial competition condition (HRC) reported perceiving more discrimination, behavioral avoidance, intergroup anxiety, and interracial mistrust relative to low interracial competition (LRC) participants. Study 2 -a preregistered replication and extension-specifically recruited similar numbers of only Black and White participants (N = 1,823). Consistent with Study 1, Black and White participants in the HRC condition reported more discrimination, avoidance, anxiety, and mistrust. Main effects for race also emerged: Black participants perceived more interracial competition and negative outcomes. Racial income inequality moderated effects; competition effects were stronger in areas with higher levels of inequality. Implications for theory development are discussed.