This paper explores the changing geography of ethnic inequality in England and Wales drawing on data from the 2001 and 2011 censuses. Specifically, we use the 2011 Office for National Statistics (ONS) area classification to examine how ethnic inequalities within local areas with different demographic and socio-economic characteristics have changed over time. Local ethnic inequalities are examined through a set of indicators which capture differences in housing, health, employment and education between ethnic minority groups and the White British in local authority districts in England and Wales. The results suggest that ethnic inequalities are widespread and persistent, and highlight the different ways in which inequalities manifest for particular ethnic groups in different localities. Ethnic inequality in housing and employment is severe for most ethnic minority groups, particularly in large urban areas that have been traditional settlement areas for ethnic minorities. However, inequalities increased most over the decade 2001–2011 in rural and coastal areas that have low ethnic diversity levels and small ethnic minority populations. The paper considers these findings in relation to theories of service provision and racism, ethnic density, and immigrant adaptation.