Stigmatized workers exhibit great variability in how to manage their occupational stigma. While prior studies primarily investigated the effectiveness of different stigma-related coping, the reason why individuals manage their stigma differently remains underexplored. Existing theories focus on how external stereotypes and prejudice shape stigmatized workers’ reactions, but stigmatized workers’ agency and unique sensemaking of occupational stigma have been largely overlooked. Adopting the perspective of lay theories, we conceptualize lay theories of occupational stigma as stigmatized workers’ perceived locus of causality (internal vs. external) and malleable (vs. fixed) belief of occupational stigma. Shifting the primary focus on external factors in the literature, this study highlights lay theories as internal cognitive drivers of stigma management strategies and stigmatized workers’ workplace functioning. Through a three-wave longitudinal study of 315 blue-collar workers, we found that internal locus of causality led to avoidance-oriented stigma management (i.e., concealment) while malleable belief reduced occupation concealment and fostered approach-oriented strategies (i.e., integrating). Additionally, stigma management strategies transmitted the influence to stigmatized workers’ vigor and job performance. This study laid the conceptual and theoretical foundations for future research on individuals’ stigma-related cognitions and stigma management.