BACKGROUND Schools are important sites for interventions to prevent childhood obesity. This study examines how variables measuring the socioeconomic and racial composition of schools and counties affect the likelihood of obesity among third to fifth grade children. METHODS Body mass index data were collected from third to fifth grade public school students by teachers from 317 urban and rural North Carolina schools in 38 counties. Multilevel models are used to examine county‐, school‐, and individual‐level effects. RESULTS Low concentrations of poverty at the school level are associated with lower odds of obesity. Schools in rural counties had significantly higher rates of obesity, net the other variables in the model. Students in minority‐segregated schools had higher rates of obesity than those in more racially diverse schools, but the effect was not statistically significant once school‐level poverty was controlled. CONCLUSIONS Place‐based inequalities are important determinants of health inequalities. The results of this study show that school‐level variables related to poverty are important for understanding and confronting childhood obesity.