<p>Despite increasing racial diversity in higher education in the United States (US), racially minoritized students (i.e., students from the Global Majority; GM) continue to experience stress related to discrimination and structural oppression. Evaluating and addressing racism in higher education across multiple levels (e.g., distal and proximal) is critical to student success. This study tested two complementary approaches to understand associations between departmental racism and GM students’ mental health. First, Hatzenbuehler’s Psychological Mediation Minority Stress Theory was tested by examining whether interpersonal racial stress mediated the association between racism and mental health disparities. Second, an exploratory model, informed by the Health Equity Framework, was tested by examining whether the interaction between racism and interpersonal racial stress was associated with mental health disparities. Undergraduate students (<i>N</i> = 601) nested within 49 departments were included. Two departmental distal stressors were defined: (1) aggregate colorblind racial attitudes (CoBRAS), and (2) faculty representation disaggregated by race and gender. Mental health outcomes included self-reported student anxiety, depression, and wellbeing. In mediation models, lower CoBRAS was associated with higher interpersonal racial stress, which in turn was associated with poorer mental health. Statistically significant moderations revealed that the negative associations between interpersonal stress and mental health was strengthened in departments with lower levels of racism. Drawing from psychological contract theories, findings suggest potential unintended consequences of anti-racist initiatives. Although it is paramount for departments to engage in anti-racist practices, they must do so with ongoing evaluation of whether minoritized student needs are, in fact, being met. Otherwise, implementation of initiatives may leave students feeling betrayed by the institution, and exacerbate mental health inequities.</p>