This article examines how different levels of internal organization are reflected in the residential patterns of different population groups. In this case, the Haredi community comprises sects and sub-sects, whose communal identity plays a central role in everyday life and spatial organization. The residential preferences of Haredi individuals are strongly influenced by the need to live among ‘friends’ — that is, other members of the same sub-sect. This article explores the dynamics of residential patterns in two of Jerusalem's Haredi neighbourhoods: Ramat Shlomo, a new neighbourhood on the urban periphery, and Sanhedria, an old yet attractive inner-city neighbourhood. We reveal two segregation mechanisms: the first is top-down determination of residence, found in relatively new neighbourhoods that are planned, built and populated with the intense involvement of community leaders; the second is the bottom-up emergence of residential patterns typical of inner-city neighbourhoods that have gradually developed over time.