Public discourse often portrays Islam as the main obstacle for Muslim minorities' integration, paying little attention to the contextual factors hindering this process. Here, we focus on islamophobia as one destructive factor that hinders the mutual integration between Muslim minority and Western majority members, affecting both groups. In Study 1, the more islamophobic majority members were, the more they expected Muslims to give up their heritage culture and the less they wanted them to integrate. In Study 2, only when Muslims experienced substantial religious discrimination did religious identity negatively relate to national engagement and particularly positively relate to ethnic engagement. Together, the studies suggest that religious prejudice in the form of islamophobia is a major obstacle to Muslims' integration because it increases the incongruity between majority and minority members' acculturation attitudes.