This article focuses on observed achievement differentials between indigenous and non-indigenous students in Chile. Using national test score data, it confirms the findings from previous literature that ethnic gaps in educational achievement exist, though they are small and to a large extent explained by family socioeconomic status. The results indicate that school composition with respect to the socioeconomic background and indigenous status of students matters for academic achievement. Controlling for the student’s socioeconomic background, the ethnic composition of the school attended is associated with student achievement. In schools where the ethnic composition is higher than the national average, the test score disadvantage of indigenous students is larger, especially for those students whose parents both identify as indigenous. The implications of the research underscore the complexities surrounding the creation of equal educational opportunities for indigenous populations in segregated contexts.