Discrimination experiences are a salient contributor to the health disparities facing Latina/x/o youth. The biopsychosocial model of minority health posits that discrimination influences health through wear and tear on the biological stress responses, including the hypothalamic-pituitary-adrenal (HPA) axis, which is a primary stress response system in the body. Emerging evidence suggests that discrimination alters the secretion of cortisol, the end product of the HPA axis, yet, whether the daily processes between discrimination and diurnal cortisol response influence mental and sleep health remains unanswered. This study integrated daily diary and post-diary survey data to examine whether daily diurnal cortisol responses to discrimination influence adolescents’ mental (depressive symptoms, anxiety) and sleep (sleep quality, duration) health in a sample of Mexican-origin youth (N = 282; Mage = 17.10; 55% female). Results showed that adolescents who experienced more discrimination across the four-day diary period exhibited steeper diurnal cortisol slopes and lower evening cortisol; however, such physiological responses tended to be associated with poorer adolescents’ mental and sleep health. The current study underscores the potential adaptation cost associated with short-term cortisol adaptation in the face of discrimination.