There are persistent and pervasive disparities in the health of Black people compared to non‐Hispanic Whites in the United States. There are many reasons for this gap; this article explores the role of “Blacks’ diminished gain” as a mechanism behind racial health disparities. Diminished gain is a phenomenon wherein the health effects of certain socioeconomic resources and psychological assets are systematically smaller for Blacks compared to Whites. These patterns are robust, with similar findings across different resources, assets, outcomes, settings, cohorts, and age groups. However, the role of diminished gain as a main contributing mechanism to racial health disparities has been historically overlooked. This article reviews the research literature on diminished gain and discusses possible causes for it, such as the societal barriers created by structural racism. Policy solutions that may reduce Blacks’ diminished gain are discussed.