Transformation and the embracing of diversity remains a major challenge at South African universities. This article reflects on the contradictory nature of first-year university students' experiences of diversity and highlights the difficult terrain that students need to navigate, often with hardly any preparation for the university environment based on their schooling experiences. Using the capabilities approach as the guiding theoretical framework, the article interprets these contradictory diversity experiences in the first year in light of data on encounters with diversity at high school. It draws on the results of a large-scale mixed methods study. Qualitative data, using focus group and visual methodologies, was collected from 270 first-year students in 2009 and 2010. In addition, a total of 2.816 high school learners selected from a diverse sample of 20 local schools completed a mainly quantitative survey that included various items about interaction with diverse peers and the broader community as well as engagement with complex and diverse ideas. The school-level data provides important contextual background for understanding and interpreting students' experiences. Such understanding is critical if we are to confront and challenge the contradictory diversity experiences during the first year at university.