My study is designed to examine how diaspora impacts the identity formation of hyphenated American characters in recent American short fiction. From the vast number of such short stories available, I chose Jhumpa Lahiri as representative of an American author dealing with diaspora in her literary work, namely in the short story collections Interpreter of Maladies and Unaccustomed Earth. In particular, I will focus on the differences between first-generation and second-generation immigrant characters in an attempt to identify certain markers that differentiate characters in diaspora from others. Lahiri does not solely portray characters who struggle with their inescapable colonial past, rather, her familiar characters are also confronted with the ethical dilemmas of everyday life. She portrays the new generation of hyphenated Americans, who do not assimilate completely into Anglo-American society, but construct their own imaginary homelands. Therefore, my task will be to trace these slices of diaspora identity in Lahiri''s American characters by looking at various identity markers that occur throughout Lahiri''s short stories.