Most research on the environmental determinants of whites' racial attitudes focuses on the "threat" hypothesis, i.e., that white racism increases with the competition posed by a larger black population. We argue that in the segregated United States, contextual effects are more complicated than this, involving both race and socio-economic status. Cross-level data on individual racial attitudes and the environment's racial and education composition, constructed from the 1991 Race and Politics Survey and the 1990 Census, support this assertion. Living amongst more uneducated whites has a greater impact on whites' racial attitudes than does living amongst more blacks. Further analysis shows that the sources of this effect come less from interracial competition and more from a psychological response of out-group hostility generated by low status contexts. We also find that whites' views on racially targeted policies are shaped by racial contexts but only where the contextual parameter coincides with the policy outcome. Our findings suggest specific limitations to the threat thesis and highlight other ways that social contexts shape racial attitudes.