The healthy development and well-being of Black, Native, and Latinx youth are threatened when authority figures, decision makers, and other adult gatekeepers involved in systems of care perpetuate negative racial and ethnic stereotypes and/or hold implicit biases. Often, the outcomes of these perceptions are punishment-based systems that are weighted against Black, Native, and Latinx youth, employ unnecessarily harsh treatment, and contribute to racial and ethnic disparities. The purpose of this report is to examine the nature and impact of distorted racial perceptions of Black, Native, and Latinx youth involved in systems of care; identify the ways in which these systems are failing them due to distorted racial perceptions; and propose strategies that will mitigate the influence of racism in these systems and promote individual and systems decision making and practice that is developmentally appropriate, nurturing, and equitable for all youth. [This report is one in a series about improving outcomes for youth involved in systems of care. For three other reports in this series, see "Protective Factors for Youth Involved in Systems of Care" (ED617197); "Breaking the Stigma and Changing the Narrative: Strategies for Supporting Expectant and Parenting Youth Involved in Systems of Care" (ED617196); and "Promoting the Well-Being of Black, Native, Latinx, and Asian Youth Involved in Systems of Care" (ED617198).]