Increasingly, researchers have found relationships between a strong, positive sense of racial identity and academic achievement among African American youth. Less attention, however, has been given to the roles and functions of racial identity among youth experiencing different social and economic contexts. Using hierarchical linear modeling, the authors examined the relationship of racial identity to academic outcomes, taking into account neighborhood-level factors. The sample consisted of 564 African American eighth-graders (56% male). The authors found that neighborhood characteristics and racial identity related positively to academic outcomes, but that some relationships were different across neighborhood types. For instance, in neighborhoods low in economic opportunity, high pride was associated with a higher GPA, but in more advantaged neighborhoods, high pride was associated with a lower GPA. The authors discuss the need to take youth's contexts into account in order to understand how racial identity is active in the lives of African American youth.