This study investigates the relationship between educational outcomes and the share of students from different ethnic origins in schools. The successful integration of students with an immigration background is a challenge that many Western societies currently face. In this context, education is considered a critical part of integrating these children and preparing them for socio-economic success. Previous research has shown that the share of immigrants in an educational setting affects the educational performance of their peers, and in particular that of other immigrant students. The aim of this study is to shed light on ethnicity clustering in schools and neighborhoods and how this relates to educational performance. Therefore, we use panel-data on secondary and vocational schools in a socio-economically disadvantaged city in the Netherlands. First, we examine to what extent students cluster with other students from their own ethnicity within schools. Second, we investigate how such clustering affects the educational outcomes of native and immigrant students. An important contribution is that we also analyze how clustering of students from a specific ethnicity affects the educational outcomes of students from the same origin. Furthermore, we account for neighborhoods clustering. Fixed effects estimations indicate that the consequences of school immigrant shares differ across student groups. No negative effect of immigrant share is observed for natives’ performance, while a higher immigrant share partly relates negatively to immigrants’ performance. The clustering of students from the same ethnic origin is not significantly related to performance. Overall, our results show that students do indeed cluster in schools and neighborhoods with students from the same country of origin. This clustering correlates significantly to student dropout and the presence of specific immigrant groups correlates significantly to dropout risks of other groups.