This paper uses a unique and very rich PISA dataset from Denmark to investigate how the ethnic concentration in the school in.uences cognitive out-comes for both immigrant and native Danish children. We .nd that immigrant children from non-Western countries have lower reading test scores than native Danish children, and that children in schools with a high ethnic concentration score signi.cantly lower in the reading test than children in schools with a low ethnic concentration. These results are fairly robust across estimation methods. Immigrant children's lower cognitive outcome is related to the ethnic concentration in the schools they attend and their relatively low socioeconomic status. Instrumenting for ethnic concentration reveals that even after taking into consideration that individuals may sort across neighborhoods, ethnic concentration in the school and the child's own ethnicity are still important factors in determining the child.s cognitive outcome. However, the negative effect of ethnic concentration in the school is only significant for the native Danish children. Finally, there is a strong positive effect on the children.s cognitive outcome of speaking Danish at home.