Background: This study examined the effect of stigma (proxied by school-level peer participation), neighborhood food environment, and demographic characteristics on participation in the U.S. Department of Agriculture National School Lunch Program (NSLP). Methods: The 1997 and 2003 waves of the Child Development Supplement to the Panel Study of Income Dynamics were linked to external data on school-level free lunch eligibility rate, fast food restaurant availability in the school zip code, and food store availability and neighborhood socioeconomic status in the home zip code. Probit models examined the effects of contextual and demographic factors on NSLP participation and free/reduced-price NSLP participation, conditional on eligibility. Differences were analyzed by grade. Results: A 10% higher free lunch eligibility rate in a child's school was associated with a 1.8 percentage point increase in the probability of NSLP participation and 2.6 and 6.7 percentage points increase in free/reduced-price NSLP participation among all and high school eligible student, respectively. Fewer grocery stores and more convenience stores increased NSLP participation. Fast food restaurant availability in the school neighborhood decreased free/reduced-price NSLP participation for high school students only. The addition of the contextual factors reduced the estimated association with several of the demographic covariates, especially race. Conclusions: The significant positive association between NLSP participation and school-level free lunch eligibility, especially for the free/reduced-price NSLP participation, suggested that stigma, or possibly peers, affected participation. Neighborhood and school contextual variables had significant effects on school lunch take-up and the results differed between high school and elementary/middle school students. (Contains 3 tables.)