In order to determine the extent of residential segregation among first or second generation Arabs living in and around Paterson, New Jersey, 286 families were located and interviewed. Field data were combined with statistics from the U.S. Census Bureau Population and Housing Summary Tape File 1-A. It was found that residential segregation was not the usual pattern among Arab Americans (which included Syrians, Lebanese, Circassians, Palestinians, and Jordanians). Most of the Arab immigrant families were found to live in working class neighborhoods, either at the city's edge or in one of the adjoining exurbs or small cities (Prospect Park, Haledon, Clifton, Passaic). In these areas, a few families may live fairly close to one another, but several blocks from the next small grouping. Nevertheless, interviews revealed a shared sense of community and frequent interaction patterns based upon life cycle rituals, homeland concerns, religious affiliations, political activism, or limited social situations. The method used to measure the degree of racial segregation--defined as the overall unevenness in the spatial distribution of two racial/ethnic groups--was the index of dissimilarity. Among all the census tracks examined, the mean level of segregation between Arab Americans and Whites was found to be 26 percent. With wide fluctuations, the mean Arab/Black dissimilarity index was 61 percent. Nonetheless, neighborhood racial composition did not appear to be a factor in Arab Americans' choice of residence or desire to relocate. Finally, the segregated distribution pattern of this group was not found to be strongly related to cost of housing. (GC)