This study examines how classroom and neighborhood ethnic diversity affect adolescents' tendency to form same‐ versus cross‐ethnic friendships when they enter middle school. Hypotheses are derived from exposure, conflict, and constrict theory. Hypotheses are tested among 911 middle school students (43 classrooms, nine schools) in the Netherlands. Multilevel (p2) social network analyses show that students were more likely to engage in same‐ethnic rather than cross‐ethnic friendships. In line with conflict theory, greater classroom and neighborhood diversity were related to stronger tendencies to choose same‐ethnic rather than cross‐ethnic friends, among both ethnic majority and minority students. Diversity did not hamper reciprocity, as students in more ethnically diverse classrooms were even more likely to reciprocate friendships.