This article develops and tests a theory to explain why perceptions of good government performance are a necessary but insufficient condition for the poor to trust their local government. The authors theorize that independent of partisan sympathies, the poor evaluate local government on the basis of government performance and the economic disparities that they observe in their neighborhood of residence. Accordingly, even if the poor hold positive perceptions of government performance, they are less likely to trust their local government when they live in a context of high economic inequality. To test their theory, the authors rely on census, public opinion, and systematic observation data collected within resident-identified neighborhood borders in each of seventy-one neighborhoods sampled from six municipalities in El Salvador. The findings are consistent with the hypotheses and indicate that economic inequality at the neighborhood level may produce a reservoir of distrust in local government among the poor. The results further highlight the political relevance of neighborhoods for the formation of citizen attitudes toward local government in the Latin American context.