Religious communities in contemporary liberal democracies experience fundamental norm conflicts, but little is known on how they tackle them. How do religious decision- makers apply religious norms regarding gender and sexual orientation in an age of egalitarianism and liberalism? Bringing qualitative and experimental evidence from Israel and the U.S., this paper identifies a practice of “social impact discrimination” whereby religious decision-makers selectively enforce and subvert religious norms based on the perceived social impact of nonconformity. A controlled decision-making experiment (N = 559) reveals that social impact considerations shape real-time decisions and are highly consequential, significantly influencing decisions to dismiss sexual nonconformists and comply with unfavorable judicial decisions. The implications of social impact discrimination for the evolution and resolution of conflicts between law and religion are discussed.