How do freedom of movement restrictions affect refugee integration? While a growing body of research studies the initial spatial allocation of refugees, there is little causal evidence on subsequent policies that restrict residential mobility. We study a contentious law in Germany, which barred refugees from moving to a location different from the one they were randomly assigned to. To identify the causal effect of the movement restriction on integration, we utilize a sharp date cutoff that governs whether refugees are affected by the policy. We demonstrate that restricting freedom of movement had pronounced negative effects on refugees' sense of belonging in Germany while increasing identification with their home countries. In addition, the policy decreased engagement in a variety of social activities. Our findings suggest that discriminatory policies send a negative signal about the inclusiveness of the host society and thereby reduce the psychological integration of refugees.