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This paper intervenes in the debate on ethnic segregation in British cities by paying attention to the hitherto neglected phenomenon of territorial stigmatisation. It discusses the stigma attached to the neighbourhood of St Paul's, Bristol; how it emerged, how it is felt and negotiated by local residents 'from below', and its effects on how that neighbourhood is managed by policy elites 'from above'. The paper critically reviews some recent influential treatments of ethnic segregation in the UK and the moral panic over ghettoisation, before explaining how the racialisation of urban space and extreme events such as the riots of 1980 and recent high-profile activities connected to Bristol's drugs economy have installed a damaging reputation of St Paul's as a segregated 'ghetto' of vice and dereliction. Using a mixed-methods approach, we show that black-white segregation in St Paul's is in fact low, and then explain how its ghetto reputation affects the experiences of residents. The paper concludes by arguing that in order to understand the complexities of ethnically diverse urban communities in Britain, territorial stigmatisation must be subjected to analytical scrutiny to complement the high-profile statistical approaches of recent years. [ABSTRACT FROM AUTHOR]