This study examined the association between socially-assigned ethnicity (how an individual is classified by others ethnically/racially) and individual experience of racial discrimination, and socially-assigned ethnicity and health (self-rated health, psychological distress [Kessler 10-item scale]) in this analysis of data from 3160 adult participants (aged ≥15 years) in the 2006/07 New Zealand Health Survey who self-identified their ethnicity as Māori. Those who were socially-assigned as European-only had significantly less experience of racial discrimination (adjusted odds ratio [OR] 0.58, 95% CI 0.44 to 0.78) than Māori who were socially-assigned as non-European. Being socially-assigned as European-only was also associated with health advantage compared to being socially-assigned non-European: more likely to respond with self-rated very good/excellent health (age, sex adjusted OR 1.39; 95% CI 1.10 to 1.74), and lower Kessler 10 scores (age, sex-adjusted mean difference –0.66, 95% C I = –1.22 to –0.10). These results were attenuated following adjustment for socioeconomic measures and experience of racial discrimination.