Florida law allows judges to withhold adjudication of guilt for persons who have either pled guilty or been found guilty of a felony. This provision may apply only to persons who will be sentenced to probation, and it allows such individuals to retain all civil rights and to truthfully assert they had not been convicted of a felony. This paper examines the effects of race and Hispanic ethnicity on the withholding of adjudication for 91,477 males sentenced to probation in Florida between 1999 and 2002. Hierarchical Generalized Linear Modeling is used to assess the direct effects of defendant attributes as well as the cross‐level interactions between race, ethnicity and community level indicators of threat, such as percentage black and Hispanic and concentrated disadvantage. Our results show that Hispanics and blacks are significantly less likely to have adjudication withheld when other individual and community level factors are controlled. This effect is especially pronounced for blacks and for drug offenders. Cross‐level interactions show that concentrated disadvantage has a substantial effect on the adjudication withheld outcome for both black and Hispanic defendants. The implications of these results for the conceptualization of racial/ethnic threat at the individual, situational and social levels are discussed.