Perceived ethnic discrimination has a negative impact on health. One of the key mechanisms may be a dysregulation of stress-responsive systems. Our aims were to investigate whether (1) acute face-to-face ethnic discrimination induces a stress response, and (2) to compare long-term endocrine functioning between immigrants and nonimmigrants. 30 male Turkish immigrants living in Germany underwent an ethnic discrimination condition and a control condition in the laboratory. Perceived ethnic discrimination, stress, salivary alpha-amylase and cortisol were measured four times. Heart rate and electrodermal activity were measured continuously. In addition, hair samples were collected from immigrants and 25 male nonimmigrants to determine long-term cortisol concentrations. Immigrants showed increases in perceived ethnic discrimination, stress, heart rate, alpha-amylase and cortisol during the ethnic discrimination condition. Immigrants had significantly lower hair cortisol concentrations than nonimmigrants. These findings suggest that acute ethnic discrimination elicits a psychobiological stress response. Abnormalities in long-term endocrine functioning in ethnic minorities may set the stage for the development of stress-related illnesses. Lay summary The present study found that racial discrimination of Turkish immigrants induced both psychological and physiological stress responses in the laboratory. Immigrants showed lower hair cortisol concentrations than nonimmigrants, indicating a dysregulated biological stress system.