The present study aims to shed light on the mechanisms of ethnic discrimination in teacher assessments in Hungarian primary schools. For this purpose, we use data collected among Roma minority and non-Roma majority students. First, we identify a considerable ethnic difference in non-blind school grades, which is beyond the ethnic difference in blind standardized test scores. Then, we derive and empirically test predictions from different theories of discrimination that might explain the ethnic difference in grades. We find that stereotype-based theories of discrimination do not explain why minority students receive lower grades than majority students. We do not exclude the possibility that taste-based discrimination exists among teachers against Roma students. A considerable part of ethnic discrimination, however, is explained by teachers’ indirectly discriminatory grading practices: Roma students’ school behaviour is evaluated more negatively by teachers than that of non-Roma students and school behaviour seems to be taken into account in grading without legitimate justification. This practice does not only disadvantage Roma students, but boys and low status students as well.