I study the impact of immigration and increasing ethnic diversity on political outcomes in immigrant-receiving countries, focusing on immigration and election outcomes in Danish municipalities 1981-2001. A rich set of control variables isolates ethnic diversity effects from those of other immigrant characteristics and a novel IV strategy based on historical housing stock data addresses issues of endogenous location choices of immigrants. Increases in local ethnic diversity lead to right-ward shifts in election outcomes by shifting electoral support away from traditional "big government" left-wing parties and towards anti-immigrant nationalist parties in particular. These effects appear in both local and national elections.