Intergroup contact is a powerful prejudice-reduction strategy, but research has also revealed its undesirable effects among the disadvantaged. To unravel these counterintuitive effects, we examine the explanatory role of sociostructural factors (permeability of group boundaries as well as stability and legitimacy of inequality) in the link between intergroup contact and both perceived group discrimination against the disadvantaged and support for collective action. We relied on quasirepresentative or nationwide samples of immigrants ( N = 1,539) and host nationals ( N = 838), who participated in two survey-based studies. Among the disadvantaged, contact was associated with less awareness of group discrimination and collective action intentions via more perceptions of permeability and/or stability. Among the advantaged, intergroup contact was associated with greater awareness of group discrimination and collective action intentions (primarily) via perceived illegitimacy of existing status disparities. Our findings elucidate the importance of structural factors in understanding the implications of intergroup contact in addressing inequality and inequity, as well as designing contact-based interventions.