To date, neighbourhood studies on ethnic diversity and social trust have revealed inconclusive findings. In this paper, three innovations are proposed in order to systemise the knowledge about neighbourhood ethnic diversity and the development of social trust. First, it is proposed to use a valid trust measure that is sensitive to the local neighbourhood context. Second, the paper argues for a conception of organically evolved neighbourhoods, rather than using local administrative units as readily available proxies for neighbourhood divisions. Thirdly, referring to intergroup contact theory and group-specific effects of diversity, the paper challenges the notion that ethnic diversity has overwhelmingly negative effects on social trust.