In this study, we integrate research findings on the impact of exposure to stereotype reinforcing local crime news with theories about the impact of residential context on attitudes about race and crime. To date, there has been no research investigating whether neighborhood context mitigates or exacerbates the impact of exposure to racially stereotypic crime news. We test extensions of two competing theories. According to the social contact hypothesis, under certain circumstances whites’ residential proximity to blacks might reduce the likelihood of further negative effects via exposure to racially stereotypic media messages. On the other hand, according to the group threat hypothesis, proximity to blacks might increase whites’ sensitivity to stereotype-reinforcing crime news. We collected information about the neighborhood racial context for each respondent in an experiment. We then exposed respondents either to racially stereotypic or non-stereotypic crime stories on local news programs. Results support our prediction based on the social contact hypothesis. When exposed to racial stereotypes in the news, white respondents living in white homogeneous neighborhoods endorsed more punitive policies to address crime, expressed more negative stereotypic evaluations of blacks, and felt more distant from blacks as a group. Whites from more mixed neighborhoods were either unaffected or moved in the opposite direction: endorsing less punitive crime policies, less negative stereotypes, and feeling closer to blacks as a group as a result of exposure to the stereotypic coverage. The implication of this moderating impact of residential integration is discussed.