Being the target of discriminatory actions because of their ethnicity can lead ethnic minority students to disengage from school. Research has relied on cross-sectional survey data to show that students who experience more frequent discrimination are more likely to be disengaged from school (i.e., between-person associations). Less is known about whether ethnic discrimination is responsible for day-to-day dynamic fluctuations in school engagement (i.e., within-person associations). The current study focuses on within-person processes to assess how different types (i.e., overt- vs. subtle behavior) and sources (i.e., peer vs. teacher) of school-based ethnic discrimination are linked to behavioral, emotional, and cognitive school engagement at the same- and next-day levels. Participants were secondary school students of Turkish and Arab descent (N = 87, M[subscript age] = 15, 62% female) in an ethnically diverse area of north-west Germany. Using an interval-contingent design, participants completed a daily diary once a day over a two week-period using a smartphone application. At the within-person level, multilevel models indicated that more frequent discrimination from teachers was associated with lower levels of cognitive engagement on the same day and emotional engagement on the next day. We found little evidence for links between any discrimination types and sources and behavioral school engagement. This study documents the negative consequences of experiencing school-based ethnic discrimination on student school engagement.