Does living in a low-income neighborhood have negative health consequences? We document causal neighborhood effects on health by exploiting a Spatial Dispersal Policy that quasi-randomly resettled refugees across neighborhoods and apartment buildings from 1986 to 1998. Refugees allocated to low-income neighborhoods had a 12 percent higher risk of having developed a lifestyle related disease 8 to 15 years after immigration compared with those allocated to high-income neighborhoods. Our results suggest that interaction with neighbors and the characteristics of the immediate environment are important determinants for health outcomes. Our results further suggest that differences in health care access, ethnic networks, and individual labor market outcomes are not the main drivers behind the neighborhood effects on health.