Foreign residents make up a small but thriving and cosmopolitan community in Portugal. Around 121,500 are legally registered but a much larger number have entered an informal economy where Europeans, Africans and South Americans, search for their fortunes. This article spotlights the presence of official registrations, looks at the recent influx of illegals, and examines their respective impacts upon the development of Portugese society. Evidence shows that some immigrant communities are now in a difficult position. Many of them are contributing to the socioeconomic development of Portugal but, at the same time, the they are often viewed as inferior groups by the host population. Several of these groups are therefore more likely to be manipulated; prejudice is growing and legal status counts for little. In that situation, the unevenness of discriminatory practices (particularly with respect to education and housing) is discussed, and the need to assist the most exploited sections of the immigrant population is outlined. (C) 1998 Elsevier Science Ltd. All rights reserved.