The core of this article sets out to examine the extent to which a multicultural society can prevent cultural racism, which, like multiculturalism, is by definition based on a culture of diversity and separation. The ‘first modernity’ was organized along national lines, with a centralist state that opted to create an essentialist and uncontested national identity. Immigrants, especially those who came from ‘third world’ countries, were expected to undergo a process of assimilation, and to integrate into the dominant culture by relinquishing their particular past and tradition. Multiculturalism, which emerged historically as a criticism of that perspective, aims at creating a kaleidoscope of associations and cultural communities, which inevitably presents a challenge to the one ‘truth’ of the nation-state with the argument that this ‘truth’ favours some groups over others. Within the multicultural model, identity politics of various groups is perceived as a means to achieve recognition, acceptance, respect and even public affirmation of differences. However, do multicultural society and identity-related differences provide a solution to cultural racism as well? Investigating the second generation of the Ethiopian Jews, who migrated to Israel during its transformation from ethno-national republicanism to a neo-liberal, multicultural society, can help answer this question. By presenting their patterns of association, character of protest activities and the newly formed hybrid identity that Ethiopian youth have developed as a means to liberate themselves from a discriminating reality, and by examining the Others’ reaction to that challenge, this article uncovers certain mechanisms and methods of action through which a multicultural society, having a thin and mild version of multiculturalism, does not diminish cultural racism, particularly its everyday non-institutional version, but in fact augments it.