We investigate macro-level implications of ethnic/racial intermarriage in one generation on ethnic/racial inequality in the subsequent generation. In our theoretical model, ethnic intermarriage affects ethnic stratification through intergenerational transmissions of socioeconomic status and ethnicity. The effects of ethnic intermarriage depend on the association between ethnic intermarriage and socioeconomic status in the parents' generation, as well as the association between ethnic (self-)identification and socioeconomic status in the offspring generation. The model suggests that under plausible scenarios, intermarriage may increase socioeconomic gaps across ethnic groups. Thus, the model's predictions temper those of assimilation and melting pot theories, which suggest that ethnic intermarriage unequivocally reduces ethnic inequality.We then consider a case study of ethnic inequality in educational attainment among Jews in Israel. Using record-linkage data on young, native-born Jewish adults from two Israeli Censuses, we are able to (1) quantify the effects of ethnic intermarriage on ethnic inequality in the offspring generation, via the intergenerational transmission of socioeconomic status; (2) consider the implications of various forms of ethnic (self-)identification among the offspring of intermarried couples; and (3) examine a period marking the onset of significant numbers of adult offspring of ethnic intermarriage. We investigate educational gaps that might have arisen in counterfactual scenarios in which ethnic intermarriage in the parents' generation had not occurred. Consistent with the theoretical model, we find that, under plausible assumptions about the ethnic (self-)identification of offspring of intermarried couples, ethnic intermarriage in the parents' generation substantially increases ethnic inequality among young adults in the offspring generation. In particular, if the offspring of ethnically intermarried couples (self-)identify as a function of their socioeconomic status, or, alternatively, as a distinct ethnic group, then ethnic intermarriage is likely to result in greater inequality in the offspring generation than in counterfactual scenarios in which ethnic intermarriage had not occurred. We thus demonstrate that ethnic intermarriage affects ethnic inequality in ways that are significantly more complex than those suggested by assimilation theories, We conclude that ethnic intermarriage should not necessarily be viewed as a vehicle for reducing group differences over time or for reducing the salience of ethnicity among disadvantaged ethnic groups.