Sanhedria, an inner-city neighborhood in Jerusalem, is populated mostly by members of several sects belonging to the Haredi (Jewish ultra-Orthodox) community. The Sanhedria case offers an opportunity to examine noneconomic processes of segregation. The paper examines residential relations between sects as reflected in their residential choices and the observed residential distribution. Sanhedria residents are close in economic status and share similar preferences regarding their way of life, yet powerful mechanisms of residential preferences acting at the level of the apartment and building result in “micro-segregation” patterns. Taken together, these mechanisms provide insight into processes typical of dense inner-city neighborhoods with multi-family housing and shared by differing religious or ethnic groups.