We ask whether ethnic residential segregation influences the future educational careers of children of immigrants in Sweden. We use a dataset comprising a cohort of children who finished compulsory school in 1995 (n = 6,560). We follow these children retrospectively to 1990 to measure neighborhood characteristics during late childhood, and prospectively through 2003 to measure the number of years of education attained thus far. The largest immigrant groups came from Finland, Turkey, former Yugoslavia, Iran and Chile. Our empirical analysis reveals that immigrant children who grow up in neighborhoods with many young coethnics who have limited educational resources, obtain relatively low average grades from compulsory school, and on average, do not attain the same levels of education as do immigrant children who grow up elsewhere. For a minority of immigrant children who lived in neighborhoods with educationally successful young coethnics, we find a positive effect of growing up in an ethnic enclave. Also in this case, the effect of the ethnic environment on future educational attainment is mediated by school results in compulsory school.