Now that we got that out of the way...
A subset of the old trick of dealing with thorny issues through metaphor. Instead of having the hero encounter racism between, say, white and black people 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 between shapeshifting squid-people and shapeshifting octopus-people.
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?, where said monsters are usually used as a metaphor for other types of discrimination, oftentimes dicrimination based on characteristics perceived by the bigot to be alterable, "curable", such as an alternative sexual identity, a disability, or a different religion/religious differences (the two tropes can often overlap in the case of religion), rather than race or ethnicity. 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 Superhuman 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.note
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, or they're just potentially-dangerous enough that one doesn't strictly have to be an absolute incorrigible raving xenophobic lunatic to consider making certain... precautions (at least against the loose cannons) to be a good idea).
Also note that Tropes Are Tools: 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.
Compare Superior Species, in which one species actually is objectively superior in some way; Species Loyalty, which may but does not need to entail this; and Master Race, when it's just in their head (and is probably a metaphor for Those Wacky Nazis for further bad-guy points).
See also People of Hair Color (which can be another occasion for racism in fantasy), Dehumanization (where one race is dehumanized to make them easier to kill) and Demonization (where negative character traits are fabricated, exaggerated, and generalized in order to justify some form of prejudice and hatred).
- Animal Jingoism: Conflict between any two kinds of talking animals.
- Cat/Dog Dichotomy: Felines versus canines.
- Dogs Hate Squirrels: Self-explanatory.
- Pets Versus Strays: Domesticated animals that live with humans, versus feral animals that live in the wild.
- Xenophobic Herbivore: Not all herbivores are friendly. Many of them are (understandably) afraid of predatory animals.
- Anti-Human Alliance: When non-humans (or transhumans) declare war against all (normal) humans.
- Elves vs. Dwarves: Elves versus dwarves.
- Expendable Clone: Cloned beings are treated as mass-produced, cheap copies and easily-replaceable objects, that aren't even granted the dignity of being considered as "real" people.
- Clones Are People, Too: But clones are actually just as real and human as natural-born people, and wish to have the same rights as they do.
- Fantastic Ghetto: De jure or de facto urban segregation against undesirable races or species.
- Fantastic Slurs: Species-specific insults and profanity.
- Fantastic Terrorists: Extremist militants whose goals and ideology are in some way motivated by conflict and prejudice between fantasy races.
- Fantastic Underclass: The lowest level of a fictional social hierarchy, consisting of races or species who are despised and oppressed by their social superiors.
- Fur Against Fang: Werewolves (or other animal shapeshifters) versus vampires.
- Half-Breed Discrimination: In the case of a hybrid character who is discriminated against by one or both of their parents' species.
- 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.
- The Right of a Superior Species: A more advanced species believe they have the right to bully and subjugate a more primitive species.
- Unequal Rites: Rivalry between different types of magic users.
- 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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