Our research examines how American children understand and talk about how race matters in their everyday lives. We draw on interviews with 44 middle school children who attend schools in an integrated county‐wide system and find that while some use color‐blind rhetoric, most children in our study know that race matters, while they offer alternative accounts for why and how. Some explain race as social inequality, while others offer cultural accounts of racial differences. Our analysis suggests that for white children, gender matters; more girls describe racial inequality than boys. For children of color, class seems to be key, with middle‐class children giving cultural explanations, including negative evaluations of others in their own racial group. We use an intersectionality framework to analyze the alternative and complex narratives children give for their own experiences of race and race relations between peers.