Research regarding disproportionate minority contact (DMC) and the juvenile justice system has concentrated on the extent to which DMC exists instead of why it exists. There remains a dearth of discussion on the theoretical underpinning of the overrepresentation of minorities in the juvenile justice system. The current research addresses this theoretical gap by examining the relationship between the racial threat hypothesis and Black–White disparity in out-of-home placements in the juvenile justice system. State-level panel data were used in the comparison of juvenile arrests to placement data. The study yielded mixed support for the racial threat hypothesis, finding percentage Black to be significantly related to racial disparity in placement rates but the ratio of Black to White employment not significant. The results showing that crime-prone, urban areas exhibit higher rates of Black–White placement disproportionality indicate that some portion of the disproportionality stems from broader social inequalities.