This article contributes to the debate about the effects of ethnic diversity on social cohesion, particularly generalized trust. The analysis relies on data from both the ‘Citizenship, Involvement, Democracy’ (CID) survey in the US and the ‘Equality, Security and Community Survey’ (ESCS) in Canada. Our analysis, one of the first controlled cross-national comparisons of small-unit contextual variation, confirms recent findings on the negative effect of neighborhood diversity on white majorities across the two countries. Our most important finding, however, is that not everyone is equally sensitive to context. Individuals who regularly talk with their neighbors are less influenced by the racial and ethnic character of their surroundings than people who lack such social interaction. This finding challenges claims about the negative effects of diversity on trust – at least, it suggests that the negative effects so prevalent in existing research can be mediated by social ties.