The present study examined changes in ethnic and racial identity (ERI) over one year among 353 Black and Latino early adolescents in relation to ethnic-racial socialization (ERS) and neighborhood economic and demographic characteristics. Parent and child reports of ERS were collected, and child ERI was assessed via self-report. Neighborhood measures included economic disadvantage and ethnic diversity. Results indicated parent report of preparation for bias was associated with greater increases in exploration but not among boys living in non-impoverished neighborhoods. In contrast, child report of preparation for bias was associated with decreases in belonging independent of child gender or neighborhood context. These findings highlight the complexities of neighborhood economic disadvantage and ERI development. Implications for future research examining gender differences and children's interpretation of ERS messages are discussed.