A subset of the old trick of dealing with thorny issues through metaphor. Instead of having the hero encounter racism between, say, whites and blacks in the American Deep South, or between ethnic Czech and Roma in the Czech Republic, or between Ainu and Japanese, or any other sets of real-world groups, they encounter racism between two-headed aliens and three-headed aliens, or between people with earth-themed elemental powers and people with water-themed elemental powers, or whatever.
Note that this can also cover other types of prejudice: anti-homosexual sentiment, religious differences, and so on. (In which case, "Fantastic Discrimination" or "Fantastic Prejudice" would be a more apt term.)
Not to be confused with Space Jews, in which an imaginary species or culture has disturbing similarities to a real-world racist stereotype. Also related to Have You Tried Not Being a Monster?, when monsters are used as a metaphor for alternative sexual identity, rather than race. Fantastic Slurs are often involved, as are Monster Rights Movements. Real Life weaselly lines like Some of My Best Friends Are X may feature. The undesired minorities may be rounded up inside a Fantastic Ghetto, and may also be the targets of Super Human Trafficking.
Futuristic science fiction examples of human-on-alien Fantastic Racism will often make the human racist a member of a group historically discriminated against on Earth (such as a black character in an American-created work) both to emphasize that human-on-human racism is a thing of the past, and for the sake of irony from the viewers' perspective.
If the point of the story is to show the evils of racism, this trope can lead to a Broken Aesop if there are in fact good in-universe reasons to discriminate against a certain type of creature (say, because they need to eat other sapient beings in order to survive, or they genuinely are Always Chaotic Evil apart from the odd angsty heroic one).
Also note that Tropes Are Not Bad: most people wouldn't believe in a world where elves, dwarves, aliens, etc got along with perfect harmony, because their own experiences of different groups' interactions don't bear that out. It's called Fantastic Racism for a reason.
If the racism appears to be spilling into something a little less fantastic and into something more real, it's Values Dissonance.
- Animal Jingoism: Conflict between any two kinds of talking animals.
- Anti-Human Alliance: When non-humans declare war against humans.
- Cloning Blues: Someone who's an artificial copy of another person feel they can't live up to the original.
- Elves vs. Dwarves: Elves versus dwarves.
- Fantastic Ghetto: De jure or de facto urban segregation against undesirable races or species.
- Fantastic Slurs: Species-specific insults and profanity.
- Fur Against Fang: Werewolves (or other animal shapeshifters) versus vampires.
- Have You Tried Not Being a Monster?: A different kind of metaphor, somewhat more like Fantastic Homophobia.
- Just a Machine: Humans versus robots and artificial intelligence.
- Muggle Power: Normal humans hating people who use magic or superpowers.
- Unequal Rites: Wizards versus witches.
- What Measure Is a Non-Human?: Humans versus all other species of sapient beings.
- Zombie Advocate: Civil rights activists working for the equality of unusual minorities; sort of an inversion of Fantastic Racism.
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