Until recently, comparative social policy research remained strongly influenced by methodological nationalism (i.e. an approach equating social boundaries with state boundaries) and has rarely considered immigration-driven changes in welfare states. Yet, over the past decades, immigrant populations have grown in size and become increasingly diversified, both in terms of origin countries and in terms of integration patterns, in all Western countries. Immigrants are a more visible but also contested presence in Western societies, which affects also the development of national labour market and welfare systems. The chapter focuses on the link between immigration-driven ethnic diversity and welfare state development by considering four interrelated issues: (1) how the patterns of immigrants' labour market incorporation in host societies affect the social rights they are entitled to; (2) how increasing international migration contributed to the reconfiguration of care arrangements; (3) the implications of immigration-driven multiculturalism for welfare state sustainability; and (4) the connection between immigration and public support for the welfare state. Then, we narrow down our analysis by providing a more detailed account of recent development of migration policies in some European countries. Based on the analysis of the country cases, we put forth the argument that recent institutional developments point to an 'Americanization' of European migration policy and, therefore, to an increasing 'racialization' of European welfare states.