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Why do ethnic cleavages emerge under programmatic party competition? How Policies Create Electoral Cleavages offers a novel explanation that focuses on the impact of government policies on the incentives of voters to prioritize their ethnic identity over other interests and identities. Government policies that pose a threat or cause relative deprivation to co-ethnics in domains central to voters link their fates and drive them to seek out pro-ethnic candidates and parties. In the face of damaging policies, activists, political aspirants, and incumbents have powerful incentives to organize the emerging voter coalition into a new ethnic constituency and connect it to the party system. How Policies Create Electoral Cleavages tests this argument on multiple case studies in nineteenth century Prussia, Baden, and Bavaria, mid-twentieth century Belgium, and late twentieth century Israel. It shows that policies that were damaging to voters' material interests or social status drove their mobilization along ethnic lines.