This paper deals with the emergence of perceived age discrimination climate on the company level and its performance consequences. In this new approach to the field of diversity research, we investigated (a) the effect of organizational-level age diversity on collective perceptions of age discrimination climate that (b) in turn should influence the collective affective commitment of employees, which is (c) an important trigger for overall company performance. In a large-scale study that included 128 companies, a total of 8,651 employees provided data on their perceptions of age discrimination and affective commitment on the company level. Information on firm-level performance was collected from key informants. We tested the proposed model using structural equation modeling (SEM) procedures and, overall, found support for all hypothesized relationships. The findings demonstrated that age diversity seems to be related to the emergence of an age discrimination climate in companies, which negatively impacts overall firm performance through the mediation of affective commitment. These results make valuable contributions to the diversity and discrimination literature by establishing perceived age discrimination on the company level as a decisive mediator in the age diversity/performance link. The results also suggest important practical implications for the effective management of an increasingly age diverse workforce. Copyright © 2010 John Wiley & Sons, Ltd.