The rising participation of far-right and illiberal parties in European governments has reshaped party competition and challenged the resilience of liberal democracies. This study investigates how illiberal far-right parties influence political discourse, particularly on immigration, and how their presence affects mainstream and niche parties across Europe. Using an innovative scaling method combining word embeddings and dictionaries, we measure illiberal rhetoric in parliamentary speeches over time and across eight countries—Austria, Czechia, Finland, Germany, Hungary, Italy, Poland, and Estonia—from 1996 to 2024. Our analysis identifies three key patterns. First, shifts in far-right parties’ immigration rhetoric correspond with changes in mainstream parties’ discourse, while niche parties show limited responsiveness. Second, conservative mainstream parties are the most affected, increasingly aligning with illiberal positions as far-right rhetoric intensifies. Third, far-right parties exhibit minimal moderation upon entering government and tend to radicalize upon exiting, partially supporting the inclusion-moderation hypothesis. These findings suggest that the presence of illiberal far-right parties has a significant illiberalizing effect on national party systems, and that both inclusion in government and exclusion from it fail to fully constrain their influence. The study contributes to understanding the strategic interactions between mainstream and far-right parties, the dynamics of party competition, and the broader implications for democratic resilience in Europe. It underscores the need for policymakers and scholars to carefully consider the effects of far-right participation on political discourse and institutional norms.