This paper asked a paradoxical question: why have immigrants to Sweden (particularly refugees) become geographically, economically, and symbolically segregated despite the putatively generous provisions of Sweden’s welfare state? I sought to understand how people and institutions perceived and deployed categories that created geographically inscribed “Otherness” through a year-long fieldwork in Botkyrka Municipality of the Greater Stockholm area. My analysis weaved together three models for explaining social segregation: the relational, the symbolic, and the spatial. I then augmented these models by taking into account the legal and bureaucratic frameworks that influence social exclusion, as well as historical factors of geographical exclusion. My study revealed how the Swedish government has, despite repeated attempts to integrate immigrant populations into the national identity, nonetheless continued to demarcate immigrant populations both symbolically and geographically, first through a long history of categorizing immigrants as “non-Swedes” (whether as “foreigner,” “immigrant,” or “people with a foreign background”), and through policies that have inadvertently separated the spaces in which immigrants are able to live. Finally, I concluded that the nation’s ethnocultural and Volk-centered definition of nationhood makes it almost impossible for immigrants to be integrated into the Swedish society and propose a shift of academic interests in three aspects.