The Chinese Exclusion Act of 1882 banned Chinese immigration and institutionalized discrimination against Chinese in U.S. society. This study examines the impact of institutional discrimination on the assimilation of Chinese by exploiting the passage of the Act and the state-level variation in the intensity of discrimination, measured by the voting outcomes of the Act and the number of anti-Chinese incidents. Our difference-in-differences estimates show that discrimination substantially slowed the occupational assimilation of Chinese in the Exclusion Era (1882–1943) and that Chinese in the U.S. reacted to discrimination by investing in human capital, improving English skills, and increasingly adopting Americanized names. The triple difference estimates show that these effects are significantly stronger in states with higher support rates of the Act or greater numbers of anti-Chinese incidents. These findings are not driven by the selection in migration and fertility.