This article examines the historical and social conditions that molded the development of the ethnic category of “Sephardim” within haredi (ultra-Orthodox) society in Israel. The significance of this category goes beyond denoting the generalized ethnic origin of Jews from North African and Middle Eastern countries. I explore this category through analysis of the ethno-class relations maintained within haredi society between Sephardim and their reference group, Ashkenazim, whose origins lie in Central and Eastern Europe. Analysis of this relationship, its historical sources, and its social development contributes to an understanding of the ethnic structuring of Sephardim in haredi society, including ethnic separation, the power of the politics of Sephardi identity, and the place of this identity in the movement of religious and political renewal among Jews from Islamic countries in Israel. It also sheds light on variations in lifestyle within the Sephardi haredi sector.