Ethnic segregation has become an emerging feature in Malaysia's education system even though the institutional role of education should have been a unifying force for the country's multi-ethnic society. The underlying problem is that, at all levels of education provision in Malaysia, alternative streams are allowed to coexist alongside mainstream education provided by the government. Alarmingly, these alternative streams are not reinforcing what mainstream education is trying to do: foster ethnic integration. Instead, the alternative streams have become divided along ethnic lines. This paper looks at the development of Malaysia's education system and examines two main factors that have contributed to the current state of ethnic segregation: enrolment choices and preferential policies. These two factors have in one way or another helped to strengthen the coexistence of alternative streams alongside mainstream education from which ethnic segregation emerges. These alternative streams have become competing rather than supplementary/complementary forces capable of challenging mainstream education. This paper explains how these two factors contribute to ethnic segregation at all levels of education notwithstanding their causal relationships at certain levels of education. Second, it evaluates the strengths and weaknesses of the measures taken by the Malaysian government to desegregate the education system. (Contains 56 footnotes.)