Many White Americans believe that individual rather than structural factors explain racial inequality, yet there is substantial variation in Whites’ perceptions. Using data from the Portraits of American Life Study, we exploit this variation to provide insight into the processes driving Whites’ perceptions of the causes of racial inequality. Specifically, we assess how social boundaries inform Whites’ explanations for the disadvantage of two racial groups: Blacks and Asians. First, we examine how each group’s position in the racial hierarchy relates to the types of explanations employed by Whites and find that Whites use individual explanations more often for Blacks than Asians. Second, we assess the extent to which the importance given to race in one’s overall identity affects how Whites explain racial disadvantage. Whites who see their Whiteness as being important to their identity are more likely to use individual rather than structural explanations to explain Black disadvantage. Together, these findings provide insight into the social psychological processes that contribute to Whites’ perceptions of racial inequality and suggest increased attention to how perceptions of out-group boundaries shape individual perceptions of inequality. Addressing this dimension of how individuals view inequality will be critical to future efforts to reduce it.