Using the American Housing Survey for 2001 and Census 2000, I examine the link between gated communities and residential segregation. I hypothesize that gating and segregation are defined by similar mechanisms, thus reinforcing urban inequality in U.S. cities. The results, however, indicate a more complex relationship. On the one hand, there are common mechanisms behind the two processes: the pursuit of higher property values, fear of crime, and fear of increased social heterogeneity. An increase in percent recent immigrants leads to higher levels of both segregation and gating. On the other hand, factors such as region, percent black, percent Hispanic, percent college graduates, and functional specialization affect the two processes differentially. Although segregation is less pronounced and declining in the U.S. urban Southwest, gated communities are much more prominent there. The results challenge the notion that the declines in residential segregation in recent decades indicate social progress.