Background. Ethnic minority groups in Western countries face an increased risk of psychotic disorders. Causes of this long-standing public health inequality remain poorly understood. We investigated whether social disadvantage, linguistic distance and discrimination contributed to these patterns. Methods. We used case-control data from the EUropean network of national schizophrenia networks studying Gene-Environment Interactions (EU-GEI) study, carried out in 16 centres in six countries. We recruited 1130 cases and 1497 population-based controls. Our main outcome measure was first-episode ICD-10 psychotic disorder (F20-F33), and exposures were ethnicity (white majority, black, mixed, Asian, North-African, white minority and other), generational status, social disadvantage, linguistic distance and discrimination. Age, sex, paternal age, cannabis use, childhood trauma and parental history of psychosis were included as a priori confounders. Exposures and confounders were added sequentially to multivariable logistic models, following multiple imputation for missing data. Results. Participants from any ethnic minority background had crude excess odds of psychosis [odds ratio (OR) 2.03, 95% confidence interval (CI) 1.69-2.43], which remained after adjustment for confounders (OR 1.61, 95% CI 1.31-1.98). This was progressively attenuated following further adjustment for social disadvantage (OR 1.52, 95% CI 1.22-1.89) and linguistic distance (OR 1.22, 95% CI 0.95-1.57), a pattern mirrored in several specific ethnic groups. Linguistic distance and social disadvantage had stronger effects for first- and later-generation groups, respectively. Conclusion. Social disadvantage and linguistic distance, two potential markers of sociocultural exclusion, were associated with increased odds of psychotic disorder, and adjusting for these led to equivocal risk between several ethnic minority groups and the white majority.