Although theory suggests that discrimination generates health inequalities in a variety of ways, research today concentrates almost exclusively on one particular mechanism: the conscious experience of unfair treatment, often termed “perceived discrimination.” To rethink perceived discrimination as one among other mechanisms, this review draws on the social stress model, reinterpreted as a macro-micro-macro sociological explanation. This reframing additionally reveals that the social stress model rests on an implicit theory of the emotional actor that provides no guidance to distinguish psychiatric illness (an individual problem) from nondisordered but painful emotional responses to external adversity (a social problem). To prevent this confusion, the review puts forward an account of the emotions that emphasizes their rootedness in the social world. On the empirical front, the review covers ethnic differences in depression and psychosis, as well as recent studies indicating that only a small portion of discriminatory treatment surfaces in the target’s consciousness as perceived discrimination.