This paper addresses two principal issues: a) the scale at which one examines urban segregation; and b) how informality, specifically accessibility to land markets and the process of land appropriation by low-income groups in Latin American cities, influences segregation patterns. Using Mexico City as a case study for Latin America, it shows that macro residential segregation levels are not becoming more polarized as many believe, due to informality of the market place and the weak state intervention through planning and zoning. However, there is a hardening of boundaries between adjacent neighborhoods as people turn to gated communities, largely for security reasons. Case study material from three Mexican cities are presented to examine how the nature of residential land costs and market segmentation contributes to segregation in Latin American cities. In a second case study, data from peri-urban low-income self-build settlements (colonias) in Texas cities demonstrate how existing inequality patterns can be reproduced by differential access to land markets. They further argue a case that such isolated (rural) settlements serving nearby urban labor market, should also be included in any analysis of urban segregation patterns, even if they do not form part of the contiguous urban area.