City regions of Central and Eastern Europe became subjects of the egalitarianism of the state-socialist system after World War II. Strict wage regulation, mass housing production and a centralised housing allocation system aimed at social mixing and homogenisation within urban societies. Indeed, in the following decades the level of socio-economic segregation decreased, though never disappeared. After 1989–1990 the principles of state-socialist redistribution of income and goods (e.g. housing) were replaced by the rules of the market. The growing exposure to international competition, globalisation, and profound economic restructuring resulted in growing wage and income disparities which in turn reshaped existing patterns of residential differentiation and created new forms of segregation. Analysing the socio-spatial differentiation and residential segregation in post-socialist cities, some authors have come to the conclusion that growing income inequalities are inevitably translated to increased housing inequalities and new territorial disparities. Others, supported with census data, argue that the level of residential segregation in post-socialist cities has not increased after the systemic changes, but on the contrary, it has lowered despite all the consequences of capitalist transition. Their explanation of the ‘paradox of post-socialist segregation’ seems to be fairly plausible: ‘post-socialist segregation processes operate in their initial phases against the socialist heritage, bringing some higher social status neighbourhoods (housing estates) as well as lower social status zones (suburbanisation of rural hinterland) closer to the city average’ (S_kora 2009). This is the point of departure in this chapter. After introducing the state-socialist heritage we focus on contemporary mechanisms of social segregation. We argue on the one hand that traditional indices (e.g. data on education) do not accurately reflect the actual socio-economic status of people any more, and obscure rather than reveal the new (capitalist) forms of socio-spatial inequalities in post-socialist cities; on the other hand, the fabric of residential segregation in these cities has become much finer as compared to state socialism. Lowering segregation indices at the macro-geographical level do not necessarily mean decreasing segregation and intermixing at the neighbourhood level. This will be demonstrated by a growing body of literature in the field.