This research considers how Germany’s longer history of race-based citizenship and anti-foreigner racism influence how migrants and Ausländers (foreigners) are perceived, discussed, and treated. It highlights how the racialized nature of German citizenship policy and contemporary state refugee policy influence current integration discourse and policy. Moreover, although Germany declares itself a humanitarian and liberal society, the rise of racial nationalism, right-wing populism, and anti-foreigner racism demonstrates an unwillingness to accept that Germany is becoming a religiously plural and multi-racial/ethnic nation. Using in-depth interview with first- and second-generation Iranians in Hamburg, Germany, I examine the experiences of Iranians’ position as “good foreigners” in Germany to illustrate existing racial/ethnic boundaries, differentiation, and hierarchies, and to underscore the limitations of cultural competence, citizenship, and economic mobility in ameliorating marginality and discrimination. Additionally, I illustrate how the post-Global Refugee Crisis climate social and political climate and the rise of racial nationalism and right-leaning political parties, like the Alternative for Germany (AfD), have re-ignited anti-foreigner racism in Germany, resulting in significant experiences of wariness, threat, racial stigma, and conditional belonging among Iranians in Germany.