The aim of the chapter is to focus on the quality of the urban environment and local policies towards sustainability as factors affecting spatial segregation in contemporary cities. The relationship between urban environmental quality and residential choices and opportunities is indeed a longstanding issue and has always affected the distribution of different social groups in the urban context. However, the attention given to this issue has played a marginal role in the general debate about spatial segregation, being predominantly investigated in the Environmental Justice (EJ) literature. This chapter aims to offer a comprehensive view of the topic by developing two different perspectives. The first perspective is concerned with the spatial segregation of low- and high-income groups according to the quality of the local environment. It will explore the relationships between the poor quality of the urban environment and segregation of the most deprived groups, concentrating on the EJ debate. Then it will consider the processes of self-segregation of the most affluent groups in areas with high ecological standards, by discussing the literature on green suburbanisation and, more recently, on the establishment of eco-cities and eco-districts in different areas of the world. The second perspective focuses on the processes linked with the regeneration of deprived and/or polluted urban environments, such as the possible demographic changes and displacement effects associated with green or environmental gentrification. Finally, the chapter discusses the relevance of some contextual factors (first of all, the role of housing policies and the housing market) in shaping different conditions of spatial segregation in relation to the quality of the urban environment in contemporary cities.