The aim of this study is to estimate the impact of neighbourhoods on educational outcome for adolescents in Sweden. Using a multilevel statistical approach and the PLACE database that consists of a census of individuals in 1990-2000 in Sweden, the paper explores different domains of neighbourhood characteristics that predict educational outcomes in adolescents. Educational achievement in year 2000 was measured for three cohorts, geocoded to their neighbourhood environments. It was found that neighbourhood characteristics related to socioeconomic resources and demographic stability are predictors of individual educational outcomes. A strong association between neighbourhood socio-cultural capital variables and education were also observed. Despite national policies on availability and access to education in Sweden, there are substantial inequalities in educational outcomes that are not simply a result of differences in individual characteristics.