There exists a racial income gap in America: Blacks earn similar to 38% less than Whites, but little is known about its relation to interracial psychological outcomes. Toward this end, the present research examined associations between the Black-White income gap and perceptions of interracial competition and, subsequently, negative intergroup outcomes. Study 1 extracted data from a large, preexisting data set (N = 2,543) and provided initial support for the hypothesis that higher levels of racial income inequality are associated with increased perceptions of competition. Study 2 then recruited approximately equal numbers of White and Black participants (N = 1,731) and demonstrated that increases in racial income inequality predict increased perceptions of competition, discrimination, behavioral avoidance, and intergroup anxiety. Implications for theory development and public policy are discussed.