Social contexts exert structural effects on individuals’ social relationships, including interracial friendships. In this study, we posit that, net of group composition, total context size has a distinct effect on interracial friendship. Under the assumptions of (i) maximization of preference in choosing a friend, (ii) multidimensionality of preference, and (iii) preference for same-race friends, we conducted analyses using microsimulation that yielded three main findings. First, increased context size decreases the likelihood of forming an interracial friendship. Second, the size effect increases with the number of preference dimensions. Third, the size effect is diluted by noise, i.e., the random component affecting friendship formation. Analysis of actual friendship data among 4,745 American high school students yielded results consistent with the main conclusion that increased context size promotes racial segregation and discourages interracial friendship.