Perceptions of intragroup and intergroup similarity were assessed in 1st grade (M=6.78 years, SD=.42) and 4th grade (M=9.79, SD=.51) boys and girls (N=382) who attended either ethnically homogeneous or ethnically heterogeneous schools. Children's evaluations of same-race and cross-race friendships were also assessed. European-American children attending homogeneous and heterogeneous schools attributed greater homogeneity to the same-race Black dyads. European-American children attending homogeneous schools, furthermore, focused on skin color in their evaluations of similarity and friendship to a greater extent than did European-American and minority (i.e., African-American, Latin-American, Asian-American) children attending heterogeneous schools. Children attending heterogeneous schools were more positive about friendship in general than children attending homogeneous schools, suggesting that social experiences in school settings are an important context of children's intergroup contact experience. The findings indicate that children's intergroup contact influences their perceptions of similarity and reasoning about cross-race friendship.