Objective: Racial discrimination experiences are common among youth with an ethnic minority background, and such experiences affect health. Stress-sensitive systems like the hypothalamic-pituitary-adrenal (HPA) axis have been proposed as one mechanism. HPA-axis activity, measured through daily patterns of salivary cortisol, is altered among individuals who experience discrimination. We know little about the day-to-day processes by which discrimination experiences become embodied in stress biology. The HPA axis is responsive to negative social-evaluative (NSE) emotion. The present study investigated whether NSE emotions are a pathway by which discrimination dysregulates HPA-axis functioning as measured by cortisol levels. Methods: Perceived discrimination, diurnal cortisol, and changes in NSE emotion were assessed in a sample of 102 young adults. Emotions and cortisol were measured across the day for seven consecutive days in naturalistic settings. Multilevel modeling and regression analyses were used to examine average and day-to-day associations between discrimination, NSE emotion, and cortisol. Mediation and specificity analyses were conducted. Results: Discrimination was associated with NSE emotion ([beta] = 0.34, p = 0.001). Day-to-day changes ([beta] = 0.10, p = 0.002) and average levels ([beta] = 0.03, p = 0.013) of NSE emotion were associated with dysregulated cortisol. NSE emotion mediated the association between discrimination and diurnal cortisol slopes ([beta] = 0.10 [95% confidence interval = 0.01-0.21]). Findings were robust for covariates including stressful life events, more pronounced for NSE emotion compared with negative affect at the day level, similar for NSE emotion and general negative affect at the person level, and specific to cortisol slopes. Conclusions: Findings suggest that daily NSE and average negative emotions are important pathways by which racial discrimination gets under the skin, or is embodied, in stress biology.