Great Britain's falling birth rate and aging population make immigration a matter of urgent concern. The post-World War II period has seen a marked rise in people originating in countries of South Asia, once part of colonial Britain, now resident in the major cities of the country. This article discusses research findings in the field of acculturation, identity and psychological wellbeing among first and second generation South Asians living in Britain. It focuses mainly on Indian (Punjabi, Sikh and Gujarati Hindu) and Pakistani groups, commencing with a brief overview of South Asian immigration to Britain. The article examines aspects of psychological acculturation that are most important for the two generations. These include: acculturation attitudes; language usage and proficiency; family and social contacts; and religion. It attempts to analyse differences in ethnic identity and acculturation strategies between the Indian and Pakistani groups, and their perception of racism and discrimination. Social disadvantage and social exclusion experienced by ethnic minority groups is well documented. The discrimination and disadvantage experienced by South Asian groups may well influence their self-perceptions regarding ethnocultural identification and openness to integration with the host society. Studies point to an urgent call for the examination of systemic and structural biases in major British institutions.