Tanzania today has one of the lowest levels of income inequality in sub-Saharan Africa, and its post-colonial history shows a level of political stability rarely seen on the continent. How this was achieved it not so clear, however. Despite being one of the most-studied countries in contemporary African studies, Tanzania’s (economic) history has received comparatively little attention. In this study, we focus on the long-term trend in income inequality from the colonial era to the present. We take advantage of Tanzania’s historical peculiarities such as its regional diversity and the presence of large numbers of immigrants from the Indian sub-continent and we investigate topics such as racial discrimination in the colonial economy, rural living standards, and the development of peasant agriculture.