In the current context of legal challenges to affirmative action and race-based considerations in college admissions, educators have been challenged to articulate clearly the educational purposes and benefits of diversity. In this article, Patricia Gurin, Eric Dey, Sylvia Hurtado, and Gerald Gurin explore the relationship between students' experiences with diverse peers in the college or university setting and their educational outcomes. Rooted in theories of cognitive development and social psychology, the authors present a framework for understanding how diversity introduces the relational discontinuities critical to identity construction and its subsequent role in fostering cognitive growth. Using both single- and multi-institutional data from the University of Michigan and the Cooperative Institutional Research Program, the authors go on to examine the effects of classroom diversity and informal interaction among African American, Asian American, Latino/a, and White students on learning and democracy outcomes. The results of their analyses underscore the educational and civic importance of informal interaction among different racial and ethnic groups during the college years. The authors offer their findings as evidence of the continuing importance of affirmative action and diversity efforts by colleges and universities, not only as a means of increasing access to higher education for greater numbers of students, but also as a means of fostering students' academic and social growth.