Drawing on in-depth interviews with 60 working-age adults, my dissertation explores the ways interracial friendships form, develop, and impact the lives of those who engage in them. Fieldwork at two racially integrated settings in Los Angeles (a church and an artistic venue) provided access to black and white individuals with close friends of another race and to contexts in which these relationships routinely develop. Much of the scholarship on "racial homophily" suggests that structural factors present the largest obstacle to interracial friendship formation, but purely structural accounts cannot explain the paucity of cross-race friendships within integrated settings. I supplement this approach with the concept of "cognitive filtering," arguing that persons of different races are less likely to see each other as sources of role-support. Regarding the development of interracial friendships, I argue that, although all friendships navigate a series of dialectical tensions, interracial friendships are particularly vulnerable to relational pressures. Among these, performing solidarity as a dyad while asserting one's individuality appears to be especially challenging. These friendships often fail or succeed depending on individuals’ abilities to maintain a delicate balance between downplaying and engaging with their racial differences. In terms of interracial friendship's impact, I find little evidence that these relationships transform racially prejudiced persons into non-prejudiced persons. However, by providing a space in which people routinely deal with racial issues, interracial friendships may broaden individuals' racial perspectives. I describe four basic forms this "broadening" may take, from the superficial to the profound. Experiences that deepen one's understanding of what it is like to be another race – an understanding I term "racial empathy" – are particularly transformative. I show that both whites and blacks can benefit from interracial friendships in these ways but whites are more likely to report shifts in thoughts and behavior. I conclude by examining interracial friendship's promise and limitations for effecting social change and theorize that changes in one's racial perspectives result from a reconfiguration of one's racial identity. I speculate that these transformations can have an impact beyond the realm of face-to-face interaction, affecting the sense of racial "group position" held collectively.