Theories of institutional racism and institutionalized discrimination have been remarkably influential in the understanding of continuing racial inequality and contemporary race relations. These theories and related claims have also been criticized as being improperly conceptualized, employing circular reasoning, neglecting nonracial dimensions of inequality, failing to specify causal mechanisms, and employing questionable inferences and attributions. These issues can be illuminated by critically reviewing how theories of institutional racism and institutionalized discrimination handle issues of social psychology. Issues of social psychology are often treated only minimally or implicitly, and often dismissively. This neglect is the root of many concerns about theories of institutional racism and institutionalized discrimination. Increased attention to and employment of scholarship in social psychology can contribute greatly to an understanding of contemporary racial inequality and race relations that advances both academic interests and practical interests in the evaluation and reform of the institutional practices that perpetuate racial inequality.