This paper examines the relationships between the residential choices of individuals and aggregate patterns of neighborhood change. We investigate the conditions under which individuals’ preferences for the race-ethnic composition of their neighborhoods produce high levels of segregation. Using computational models, we find that high levels of segregation occur only when individuals’ preferences follow a threshold function. If individuals make finer-grained distinctions among neighborhoods that vary in racial composition, preferences alone do not lead to segregation. Vignette data from the Detroit Area Study and the Multi-City Study of Urban Inequality indicate that individuals respond in a continuous way to variations in the racial makeup of neighborhoods rather than to a threshold. Our findings suggest that race preferences alone are insufficient to account for the high levels of segregation observed in American cities.