This article examines how the interdistrict transfer of White students from a majority-Latino school to a majority-White school increased school segregation in a small California town. The article argues that White parents' decisions to transfer their children, coupled with the sending school district's decision to allow the transfers, constituted institutional racism, as these practices further segregated Latino/a students in a high-poverty school. Qualitative data reveal that many of the transfer families were prejudiced toward Latino/a children and families, and ethnographic data show how local race relations, historical events, and the relationship between the school and the district contributed to segregation. (Contains 5 footnotes and 4 tables.) [A previous version of this article was presented at the Globalization, Diversity, and Education Conference (Pullman, Washington, March 2005).]