Migration and its consequences for the legitimacy of the welfare state have been the subject of a number of controversial discussions over the past several decades, and remain highly salient issues today. To be legitimate, welfare states need to function well and to deliver what is expected of them (“output-legitimacy”), but they also need to do so in a way that conforms with popular sentiments (“input-legitimacy”). Migration is likely to affect both dimensions of legitimacy. This chapter reviews the existing research on the relationship between migration and the welfare state and maps how international mobility and ethnic diversity interact with contemporary welfare states. In particular, we focus on the tension between the economic and fiscal rationale for more migration and the socio-political rationale for less migration, and spell out the conflicting policy imperatives and difficult tradeoffs involved. A central theme here is that welfare states often need migration to remain fiscally sustainable and to maintain their redistributive capacity, but migration may simultaneously undermine the political sustainability of inclusive welfare states. We also discuss a number of potential remedies to this tension, drawing, inter alia, on insights from research on prejudice and discrimination in social psychology