This article explores the potential for linking immigration research with racial formation theory to examine contemporary immigrant identities. The current literature is dominated by three paradigms (ethnicity, nationalism, and transnationalism) and five theoretical perspectives on immigrant identities (plain American, hyphenated American, panethnic American, nationality origin, and transnational). They are all flawed in their reductions of race to the concepts of ethnicity, nationality, and transnationality. Based on my reading of the existing research, I will argue that immigration researchers can benefit from using racial formation theory to explore immigrant identity due to its acknowledgment of the autonomous power of race. However, racial formation theory has been correctly challenged due to its high level of abstraction and lack of micro‐level analyses. Certain transnational migration studies have underscored the necessity to integrate national origin into racial formation theoretical frameworks. According to this transnational perspective, my conclusion is that immigrant families represent a logical starting point for conceptualizing the relationship between immigration and racial formation.