This article presents the first nationally representative analysis of the association between racial discrimination and psychological distress among older Aboriginal and Torres Strait Islander people. Results show: (1) experiences of racism (as measured by unfair treatment) and avoidance are encountered by a significant minority of older Aboriginal and Torres Strait Islander people; (2) there is a clear association between experiences of racism and avoidance with psychological distress, with these results being robust to a range of confounding factors and complex survey design features; and (3) the associations between racism and distress are amplified by the severity of racism, and, when occurring, with avoidance. The association remains strong or is strengthened when racism and avoidance occur in contexts or situations crucial to the human capital development of older people (e.g., health care, education, and the workplace). Our findings underscore the importance of culturally safe health and social services/programs and further the imperative to address discrimination in all its forms.