This article examines how out-group perceptions among Asian Americans, blacks, Latinos, and whites vary with the racial composition of their surroundings. Previous research on the contextual determinants of racial attitudes offers mixed expectations: some studies indicate that larger percentages of proximate out-groups generate intergroup conflict and hostility while others suggest that such environments promote interracial contact and understanding. As most of this research has been directed at black-white relations, the applicability of these theories to a multiethnic context remains unclear. Using data that merge the 1992–1994 Multi-City Study of Urban Inequality and 1990 Census, we find that in neighborhood contexts, interethnic propinquity corresponds with lower levels of out-group prejudice and competition, although intergroup hostility is higher in metropolitan areas with greater minority populations. Further tests suggest that these results do not occur from individual self-selection; rather ethnic spatial and social isolation bolster negative out-group perceptions. These findings suggest the value of residential integration for alleviating ethnic antagonism.