This article analyses the effect of immigration-related diversity on different forms of trust through the hierarchical analysis of three levels of approximately 5,000 respondents nested in over 800 neighbourhoods and 33 municipalities. The data set is based on a unique survey that was specially designed to measure different forms of trust and to test the effects of context. Building on previous findings about the effect of diversity on various forms of trust in Sweden, we discuss three mechanisms through which diversity may drive down community trust in diverse settings – dissimilarity, perceptions of unfairness and asymmetry of information and norms – and explore these empirically. In particular, we examine under which conditions asymmetry of information and norms and perceptions of unfairness affect community trust, and how it interacts with diversity. Our analysis reveals that norm asymmetry and perceptions of unfairness affect community trust negatively but the negative effects are more pronounced in the most diverse local communities.