Approaching the inverse association between perceived discrimination and close relationship functioning from a stress and coping framework, we propose and test a novel model incorporating psychological (emotion dysregulation) and physiological (chronic inflammation) pathways. Analyses of data from a sample of African American participants (N = 592) enrolled in the Midlife in the United States (MIDUS) study revealed support for the proposed model. Specifically, results from structural equation modeling analyses showed that perceived discrimination was indirectly associated with increased emotion dysregulation (venting and denial) through stressor appraisals and directly associated with increased inflammation (interluekin-6, e-selectin and c-reactive protein). Furthermore, relationship strain with family, friends and spouses was associated with greater levels of emotion dysregulation and chronic inflammation. Overall, the proposed model fit the data well and provides support for new avenues of research on the social, psychological and physiological correlates of perceived discrimination and close relationship functioning. To conclude, evidence for the proposed biopsychosocial model is summarized and directions for future research on these topics are discussed.