Exposure to derogatory language about immigrants and minority groups leads to political radicalization and deteriorates intergroup relations. This article addresses the psychological processes responsible for these effects as well as those involved in hate‐speech proliferation in contemporary societies and discusses the factors that constrain its growth. We propose that frequent exposure to hate speech has severe effects on emotional, behavioral, and normative levels. Exposure to hate speech results in empathy being replaced by intergroup contempt as a dominant response to others—it is both a motivator and a consequence of derogatory language. The increased presence of hate speech in one's environment creates a sense of a descriptive norm that allows outgroup derogation. This leads to the erosion of existing antidiscriminatory norms. Finally, through a process of desensitization, hate speech reduces people's ability to recognize the offensive character of such language. Based on empirical evidence from the fields of social psychology and psychology of emotion and aggression, we propose a model that explains the described processes, and we trace the dynamics of this model using an agent‐based modeling approach. We show that the mechanisms potentially effective in constraining hate‐speech proliferation (empathy, norms) are eroded by hate speech itself. We argue that through basic psychological dynamics, societies become more accepting of derogatory language and less accepting of immigrants, as well as religious, ethnic, and sexual minorities.