IntroductionPositive psychological characteristics have been found to be associated with discrimination and school outcomes separately; however, no work has examined these associations together or in North American Indigenous (NAI) populations. NAI adolescents experience high rates of racial discrimination. Because discrimination has a detrimental impact on academic outcomes it is critical to identify factors that could buffer this impact. The purpose of this study was to examine the indirect effect of racial discrimination on three distinct school outcomes (i.e., attitudes toward school, grades, and educational attainment goals) through the pathway of three positive psychological characteristics (i.e., satisfaction with life, subjective happiness, and self‐compassion).MethodsFirst Nation adolescents living on a rural reserve in Eastern Canada (N = 106, Mage = 14.6 years, 50.0% female) completed a pencil‐and‐paper survey in Spring 2017 as part of a larger community‐based participatory research study.ResultsIn the model examining school attitudes, indirect effects through subjective happiness (b = −0.21, 95% confidence interval (CI): [−0.53, −0.03]) and self‐compassion (b = −0.19, 95% CI: [−0.39, −0.04]), but not satisfaction with life, were significant. In the model examining grades, only the specific indirect effect through subjective happiness was significant (b = −0.27, 95% CI: [−0.59 −0.07]). Similarly, in the model examining school goals, only the indirect effect through subjective happiness was significant (b = −0.40, 95% CI: [−0.94, −0.08]). The direct effects of discrimination on school attitudes (b = 0.02, 95% CI: [−0.52, 0.56]), grades (b = 0.16, 95% CI: [−0.39, 0.71]), and school goals (b = −0.03, 95% CI: [−0.90, 0.84]) were not significant after controlling for positive psychological characteristics.DiscussionSchools should foster positive emotions to enhance academic outcomes, especially for NAI youth who are more likely to experience racial discrimination.