The present study investigated the role of authoritarianism in the association between the actual proportion of ethnic minorities (objective diversity) within a neighborhood and majority members' subjective perception thereof (perceived diversity). Additionally, we tested how authoritarianism affects the direct and indirect relationships between objective diversity and outgroup threat, anxiety, and mistrust. Analyses in a nationally stratified sample of Dutch citizens (N = 848) without migration background from 706 different neighborhoods showed that higher levels of authoritarianism have a dual effect on the relationship between objective diversity and negativity towards outgroups. In particular, authoritarianism (i) boosts the indirect relationship between objective diversity and greater outgroup negativity through perceived diversity, and (ii) curbs the direct association of objective diversity with reduced outgroup negativity. These findings shed light on how majority members with different levels of authoritarianism differentially perceive diversity in their neighborhood, and how this relates to their responses to ethnic minorities.