“How to understand the interaction between urban space and social processes” is a significant question in urban studies. To answer that, the city needs to be recognized as both a physical and a social entity and urban theory and practice need to connect these (Hillier 2007). The present research aims to re-examine the complex correlation between spatial and social inequality manifestations in the city of Tehran regarding the concept of segregation. It observes the causes and consequences of segregation in Tehran and provides an insight into both concepts of socio-spatial segregation and neighborhood effects and creates a link between them. First, I argue when, where, and for whom spatial locations affect the chances of social networks in Tehran. Then, I discuss how neighborhood effects can emerge via social network mechanisms and thus affect the perceptions of residents in the neighborhoods.