Abstract Anti‐Indigenous racism has predominantly been understood in Latin America through the lens of culture, epistemology, and embodied nonphenotypical traits. Phenotype‐based discrimination is an underemphasized aspect of race in the region, especially in spaces with a high Indigenous population. This article ethnographically captures the distinct forms in which Indigenous people are racialized for phenotypical traits in Andean Bolivia, with a special focus on three interrelated spheres: the labor market, everyday social interactions, and intimate relations/kinship. It reveals how phenotype‐based racialization generates representations, structures access to resources, and influences processes of socioeconomic mobility. Moreover, the fluidity of systems of racial classification in Latin America leads to phenotype‐based discrimination receding in some contexts but resurfacing in others, thereby making it more formidable. The article also highlights the intersection of race and gender in the pigmentocratic structuring of the social order.