In this paper, the relationship between territorial sense of community (SoC), perceived ethnic heterogeneity within the community and ethnic prejudice was analyzed. Specifically, the moderating role of perceived ethnic heterogeneity within the community on the SoC–prejudice relationship was tested in a sample of residents (N = 603) of the Salento region, Italy. Results showed that the relationship between SoC and prejudice was moderated by perceived contextual heterogeneity. For blatant and subtle prejudice, when perceived ethnic heterogeneity was low, SoC was negatively associated with prejudice. In the case of modern prejudice, SoC was positively associated with prejudice when perceived ethnic heterogeneity was high. Copyright © 2016 John Wiley & Sons, Ltd.