In this paper we estimate the effect of charter schools on the diversity of nearby traditional public schools (TPSs) and neighborhoods in New York City. We employ a difference-in-differences approach that exploits the differences in the expansion of the charter sector between grades in the same school. This approach allows us to isolate the effect of charter schools from other neighborhood demographic changes. Our results show small positive effects of charter school expansion on TPS diversity as measured by the entropy score. This change is explained by small increases in the number of White students attending nearby TPSs and larger reductions in the number of Black and Hispanic students in these schools. We also find descriptive evidence that while both neighborhoods and TPSs are slightly more diverse following charter school expansion, schools are changing faster than their surrounding neighborhoods.