Recent studies have raised concerns about the accuracy of self-reported drug use. Biological assays used to validate the surveys indicate that some individuals report much less than they actually use. Some of the factors associated with under reporting are memory failure, fear of legal consequences, and social desirability. Studies have shown that under reporting tends to occur more often for cocaine than for other drugs. These studies have given little attention to the association between under reporting and broader environmental contexts. This study examined the possible links between levels of neighborhood segregation and under reporting of drug use. The hypothesis was that residents of segregated communities would be more likely than residents of more diverse neighborhoods to under report drug use. Data for the study were collected as part of a community survey of Chicago residents conducted in 1997. The sample was drawn from a household survey of high-risk communities with above-average admissions to State-supported drug and alcohol treatment programs. A total of 303 adults participated in the survey. The sample characteristics showed that 54 percent were African-American, 17 percent were Hispanic, and 28 percent were White; 71 percent were female; the average age of respondents was 27 years; and approximately 75 percent had at least a high school diploma or GED. Cross-tabular analyses were followed by logistic regression analyses for the main dependent variables. Findings from the study support the hypothesis and show that underreporting was more prevalent among African-Americans than among Whites and Hispanics. Over 42 percent of respondents who lived in more segregated neighborhoods whose hair samples tested positive for cocaine reported that they had never used this substance, compared to 25.6 percent for partially diverse neighborhoods, and 13 percent for diverse neighborhoods. Under reporting also occurred more often among African-Americans from more segregated and partially diverse neighborhoods than African-Americans from diverse neighborhoods. For Whites, under reporting occurred only among residents from partially diverse neighborhoods, while Hispanics under reported at the same rate across neighborhood types. The researchers conclude that residents of less diverse communities may be more suspicious of research and researchers, especially when the focus is on illegal and potentially stigmatizing topics such as drug use. Future research should evaluate the specific mechanisms by which social context influences drug use reporting. Study limitations are discussed. 29 references and 2 tables