What role does skin color play in the racial experiences of new immigrant groups as they settle in the U.S.? To answer this question, I systematically examine the role of skin color in structuring experiences of race and ethnicity for second generation South Asians, a group characterized as doing well economically and thus seen as a model for contemporary assimilation. Through 120 in-depth interviews and supplemental ethnographic observations, I find that skin color is central to the routine racial experiences of the second generation. South Asian racial formation is dually impacted by both the U.S. racial classification system and transnational colorism based on class and caste stratification from South Asia. Previous research on Latino/as demonstrates that transnational systems of stratification have impact on the lives of first generation immigrants. This study reveals the enduring impact of such systems in the racial formation even for the second generation. Early on South Asian women hear comments about their skin color from first generation family members. These comments are deployed as policing strategies influenced by the transnational South Asian colorism system. South Asian men are less policed about their bodies with the exception of men on the darker end of the spectrum. The skin color of South Asians also has significance under the regime of a U.S. racial system in the post-9/11 era. The racialization extremes they experience from “model minority” to “terrorist” due to their skin color can occur daily with a shift in social settings. As such, South Asians are routinely mistaken for a wide variety of other racial groups such as Latino or Middle Eastern due to their skin color. The outcomes indicate the formation of a racial middle and a tri-racial system. Racial ambiguity may be a characteristic feature of the racial middle. The formation of the racial middle is not just an outcome of Black and White relations in the U.S. but also due to the impact of transnational colorism. The United States is not only going through Latin Americanization but also Asianization of its racial system.