Research on race and diagnosis initially focused on black-white differences in depression and schizophrenia. Statistics showing a higher treated prevalence of schizophrenia and a lower prevalence of depression for blacks seemed to support the claim that blacks did not suffer from depression. Others argued, however, that clinicians were misdiagnosing depression in blacks. This article reviews empirical studies of racial differences in individual symptoms and summarizes the evidence on misdiagnosis. It argues that more attention must be paid to resolving two contradictory assumptions made by researchers working in the area of race and diagnostic inference: (1) blacks and whites exhibit symptomatology similarly but diagnosticians mistakenly assume that they are different; (2) blacks and whites display psychopathology in different ways but diagnosticians are unaware of or insensitive to such cultural differences. The article concludes with suggested research directions and a discussion of critical research issues.