Xenophobia carries the notion of fear and hatred towards other foreign races. It is a social disease that can destroy the harmony and peace of society, especially in multi-racial and multi-ethnic countries. In the context of the federal state, xenophobia refers to the fear and hatred of a provincial community towards another province or the federal government as they feel that their rights are being taken away or denied by the federal government. This article discusses the xenophobia of Sabahans towards the federal government resulting from the feeling that the federal government is a 'foreigner' who has deprived them of their rights as enshrined in the 1963 Malaysia Agreement and the 20-point Agreement. This article utilised the concept of xenophobia as a tool of analysis. Primary data was taken from interviews with authoritative informants, whereas secondary data was obtained from books, theses, articles, newspapers, government documents and news portals. This article argues that the xenophobia of the Sabahan people has given birth to anti-federal groups that threaten the integrity of the federation but not to the point of being able to break the federation.