Racial trauma describes the emotional trauma and associated psychiatric reactions, such as distress and compromised well-being, which arise from perceived incidences of racism. It is an emerging psychological paradigm that is intimately linked to state-based policy measures such as child removal. Racial trauma is also deeply institutionalised in Australia’s education system as a consequence of the focus on dominant (white Standard Australian English speaking) culture, language, literacy and numeracy standards. Despite receiving little recognition in mental health work or the education sector, the effects of such trauma are profound and can account for the high rates of suicide and social dysfunction that we see in remote Indigenous communities as well as the low academic achievement and English language acquisition rates in Aboriginal students. This paper presents a literature review related to publications that scrutinise the relationship between racism in policy and schools and racial trauma, drawing on some research findings by one of the authors. It suggests alternative Indigenous pedagogies that can both mitigate and remove racial trauma from the school environment and lead to successful academic outcomes and well-being for Aboriginal students.