<p>Identity-related mistreatment occurs when employees experience harassment or discrimination based on characteristics such as race, sex, religion, or national origin. Although such mistreatment directly harms those targeted, our research demonstrates that it also affects employees who observe or become aware of others’ mistreatment. Drawing on integrated climate theory and the vicarious mistreatment model, we propose and test a framework in which a psychological climate of identity-related mistreatment engenders emotional exhaustion, which, in turn, indirectly leads to withdrawal behaviors and production deviance (i.e., intentional reduction in the quality and quantity of work output) as coping responses. Results revealed that employees aware of identity-related mistreatment within their organization experienced emotional exhaustion and subsequently engaged in withdrawal behaviors and production deviance to cope with this strain. Moreover, diversity beliefs moderated this process, such that employees with stronger diversity beliefs experienced greater emotional exhaustion from a psychological climate of identity-related mistreatment. We tested our hypotheses using a two-wave survey design with a 3-month time lag. Results showed the indirect effects on withdrawal behaviors and production deviance through emotional exhaustion were strongest among individuals with stronger diversity beliefs. These findings reveal that employees who most strongly value diversity are most adversely affected by psychological climates perceived as tolerating identity-related mistreatment, demonstrating that workplace deviance may serve as a coping strategy in response to climate-induced strain. Implications for theory and practice are discussed.</p>