Although considerable evidence shows that residential segregation is deleterious to the health of African Americans, findings regarding segregation and health for Hispanic Americans are inconsistent. Competing hypotheses regarding the effects of neighborhood segregation on health are tested with data from Puerto Rican and Mexican American residents of Chicago. Multilevel analyses reveal that segregation is associated with more health problems for Puerto Rican Americans but not for Mexican Americans. In addition, the relationship between segregation and health was conditioned by generational status for Mexican Americans: Second- or later-generation Mexican Americans living in highly segregated neighborhoods had better health than first-generation Mexican Americans in such neighborhoods. These findings reveal that residential segregation has differential effects across Hispanic groups and suggest that a high degree of contact with Mexican Americans promotes health by facilitating flow of informal health resources and social support. (Contains 3 notes, 5 tables, and 2 figures.)