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Despite initial success in democratic transition and consolidation, a number of eastern European countries have experienced significant democratic backsliding — the erosion of independent judicial review, pluralist information environment, and viability of political opposition. While research on eastern European backsliding focuses on the role of diverse historical legacies, economic, and cultural factors, insufficient attention has been accorded to a little noticed fact: The countries experiencing the highest levels of democratic backsliding, such as Hungary and Poland, are among the most ethnically homogenous countries in the region (and in the world). On the contrary, the most ethnically heterogeneous countries, such as Estonia or Latvia, have seen little to no backsliding. This paper consequently addresses the question of whether and how ethnic heterogeneity influences political competition in ways that may sustain democratic institutions and practices. Using individual- and party-level data, the paper addresses the conditions and mechanisms under which ethnicity influences liberal democratic politics across the region.