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In this paper we offer a critical analysis of ethnic relations in an Israeli 'mixed city'. Similar to other sites shaped by the logics of settling ethnonationalism and capitalism, the 'mixed city' is characterized by stark patterns of segregation between a dominant majority and a subordinate minority, as well as by ethnoclass fragmentation within each group. 'Mixed' spaces are both exceptional and involuntary, often resulting from the process of ethnicization prevalent in contested urban spaces. We theorize this setting as an 'urban ethnocracy', where a dominant group appropriates the city apparatus to buttress its domination and expansion. In such settings, conspicuous tensions accompany the interaction between the city's economic and ethnoterritorial logics, producing sites of conflict and instability, and essentializing group identities and ethnic geographies. Empirically, the paper focuses on the city of Lod or Lydda, Israel, where the production of contested urban space has been linked to the construction of an exclusionary Israeli-Jewish national identity and to the establishment of hierarchical ethnic citizenship. Like other previously Arab cities, Lod has been the target of a concerted strategy of Judaization, which has formed the city's central planning goal since the late 1940s. We analyze in detail various aspects and sites of the Judaization process, and of the ensuing urban conflicts. We point to the chronic instability of urban ethnocracies, and to the need of planning to rise above narrow ethnocentric considerations in order for the 'mixed city' to prosper as the home for all communities. [ABSTRACT FROM AUTHOR]