Where the lines of an armed conflict coincide with ethnic boundaries, the political salience of ethnicity increases. In post-conflict situations that may seem defined by ‘ancient hatreds’, the political salience and character of ethnic identities remain dynamic. Bringing together contributions from the comparative politics literature on power-sharing and the policy-dominated field of post-conflict peace-building, this article examines how ethnic divisions have been addressed in recent cases of institution-building directed by international forces after military intervention – in Bosnia, Kosovo, Afghanistan and Iraq. It finds that an ‘assumption of intransigence’ has often influenced on choices of institutional design, and that the institutionalization of ethnicity has become an important hindrance to peacebuilding. On this background, the article argues in favor of institutional designs that do not fixate the accentuation on ethnicity in politics; more flexible ways should be sought to assure inclusivity and representativeness of different ethnic groups. A wide range of institutional design options exist that can be combined, on the basis of in-depth assessments of each conflict, to de-ethnicize politics and build sustainable peace.