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School leaders across Australia are increasingly educating students from racially, ethnically, religiously, and linguistically diverse backgrounds. Changes in school composition may create challenges to social cohesion. Yet, principals receive limited training on what to do when faced with incidents of discrimination inside the school building and xenophobia policies and rhetoric outside of schools. This paper explores the perspectives and behaviors of 25 secondary school leaders in government and Catholic schools across New South Wales, Australia vis a vis addressing racial/ethnic/religious differences among students, and responding to racism and discrimination. It examines the conditions under which principals take action against racism and support students’ racial/ethnic identity development, and considers the factors influencing leaders’ distinct behaviors and inaction.