To what extent Arab Sunnis and Arab Shiites in Iraq discriminate against each other? Does the sectarian narrative impact on people’s discriminatory attitudes? What is the role of religiosity, living in segregated cities, and in cities with higher levels of violence in determining discrimination between Arab Sunnis and Arab Shiites? For over a century Iraq has been caught up in interlocking pattern of ethno-sectarian conflicts, civil wars, and terrorism. Between 2006 and 2007, the Sunni-Shiite civil war caused approximately twenty three thousand deaths and internally displaced over three million people (Dawisha, 2009; Kirmanc, 2013). A UN report released in 2016 stated that between January 2014 and October 2015 more than eighteen thousand civilians were killed and another three million people were displaced in the war against the Sunni terrorist group ISIS. These conflicts and the institutionalization of ethno-sectarian differences in Iraq post-2003 aggravated relations among various ethnic, religious, and sectarian groups, especially between Arab Sunnis and Arab Shiites. This study uses Arab Barometer, Wave II collected in 2011 to investigate the variance in Arab Sunnis and Arab Shiites discriminatory attitudes. The existing literature theorizes that sectarianism is institutionally generated. It narrowly focuses on political actors and their exclusive role in shaping and manipulating identities. The problem with this macro analysis is that it ignores the attitudinal dimension of sectarianism and it vaguely investigates people’s beliefs and attitudes. This study fills this gap and it offers a micro level analysis of sectarian discrimination practiced through everyday social interaction. Further, the two binary approaches to the study of sectarianism-primordialism and constructivism-ignore the more subtle forms of ethno-sectarian discrimination and prejudice (Haddad, 2014). This study fills this gap and it argues that the complexity of ethno-sectarian dynamics cannot be restricted to just violence or active hatred. For example sectarian discrimination can be manifested in subtle, unintentional, and even in unconscious ways (Davis, 2010; Haddad, 2014). Another important contribution of this study is that it pushes theories of sectarianism beyond primordialism and constructivism by offering a social psychological perspective to this issue. This study explores how in-group identity-religious and sectarian-, as well as contact help to explain variation in sectarian discrimination. Finally, this study will illuminate patterns of variations across different Iraqi cities. This will help policy makers, local government, and post-conflict policy interventionists identify better the factors that constrain the process of peaceful building and peace coexistence in Iraq.