This article aims to reorient developmental psychologists' view of “ethnicity” and align them more closely with disciplines such as sociology and anthropology. Developmental psychologists mostly treat ethnicity as apolitical, ahistorical and limited to mutually exclusive, homogeneous categories measured by decontextualized self-report questionnaires. Moreover, self-report “ethnicity” scales typically fail to integrate a full perspective on ethnicity, such as power, inequality, class, religion, gender, sexual orientation, age, and generation. I take issue with the position that ethnic groups constitute fixed natural entities based on ethnic identities. In my view, ethnicity emerges in social interaction in specific social and political contexts. Hence, “ethnicity” is primarily a theory of social relations; it is intensified or abated when individuals engage in mutual interaction. I argue that no reference to ethnicity is politically impartial. Finally, I present a set of recommendations that might have useful theoretical and methodological implications for ethnicity research in developmental psychology.