Abstract: Does living in a low-income neighborhood have negative health consequences? We document neighborhood effects in health by exploiting a Spatial Dispersal Policy that resettled refugees quasi-randomly across neighborhoods from 1986 to 1998, which allows us to separate causal impacts from selection into neighborhoods. We show that the risk of developing a lifestyle related disease before 2018 increases by 5.1 percent relative to the sample mean for individuals who were allocated to the poorest third of neighborhoods compared to allocation to the richest third of neighborhoods. In particular, among women the impact of neighborhood income on health is larger. We find no evidence that our results can be explained by differences across neighborhoods in access to health care, presence of ethnic networks, employment or individual income growth differences. Instead, our results suggest that interaction with immediate neighbors and the characteristics of the very local environment are important for understanding neighborhood effects in health.