This research examines how sponsored user‐generated content influences consumer engagement on TikTok across three studies. In the first study, we demonstrate that when content creators endorse brands through sponsorship, they are perceived as less authentic. This perceived lack of authenticity, in turn, reduces consumer engagement with brands. In the second study, we show that the influence of sponsorship on consumer engagement is moderated by the content creator's popularity, as reflected by their follower count. Specifically, the negative effect of sponsorship on consumer engagement is observed only among popular creators with large followings, while less popular creators do not experience the same negative impact. In the third study, we show that for popular creators, sponsorship can enhance consumer engagement when the endorsed brand is perceived as small, compared to when it is perceived as large. Together, these findings extend our theoretical understanding of how sponsored user‐generated content shapes consumer engagement on TikTok. Additionally, our research provides valuable insights for brand managers aiming to develop effective digital marketing strategies and for content creators looking to optimize engagement with their audience.