Ethnic diversity is generally associated with less social capital and lower levels of trust. However, most empirical evidence for this relationship is focused on generalized trust, rather than more theoretically appropriate measures of group-based trust. This article evaluates the relationship between ethnic diversity – at the national, regional and local levels – and the degree to which coethnics are trusted more than non-coethnics, a value referred to here as the ‘coethnic trust premium’. Using public opinion data from sixteen African countries, this study finds that citizens of ethnically diverse states express, on average, more ethnocentric trust. However, within countries, regional ethnic diversity is associated with less ethnocentric trust. This same negative pattern between diversity and ethnocentric trust appears across districts and enumeration areas within Malawi. The article then shows, consistent with these patterns, that diversity is only detrimental to intergroup trust at the national level when ethnic groups are spatially segregated. These results highlight the importance of the spatial distribution of ethnic groups on intergroup relations, and question the utility of micro-level studies of interethnic interactions for understanding macro-level group dynamics.