Urban segregation and spatial expressions of inequality are increasingly pressing issues for European planners and public authorities. Within Stockholm, Sweden, these concerns have become inescapable, and the city’s social divisions and ‘immigrant issues’ have triggered fierce public debate throughout the country. Stockholm has, over the past few decades,become a showcase for a process of ‘splintering urbanism’ that has placed immense pressure on the city’s housing market and prompted a variety of political responses. Many suburbs built on the city’s edge in the 1960s and 70s (including Husby, Tensta, North Botkyrka, and Södertälje) have become islands of high unemployment, low social mobility, and stigmatization as the city centre has grown increasingly expensive and gentrified. In this paper, a qualitative case study on the relatively deprived, largely non-white neighbourhood of Alby is used to illustrate the discursive processes driving Stockholm’s racial segregation. By applying a critical discourse analysis to interview material with key planners from Alby, I articulate the link between structural racism, neoliberal housing policy, and Swedish planning norms to argue that segregation must be seen as a deeply political, historically rooted process. Drawing from post-structuralism and critical race theory, I contend that a needs-based policy approach within Stockholm’s housing and labour markets is critical for combating residential segregation and creating a more just urban environment.