In this paper we shed light on the various ways in which native Dutch estimate the size of the ethnic minority population in their neighbourhood. We formulate hypotheses on how characteristics of the neighbourhood (i.e. objective group sizes, ethnic segregation, economic deprivation and crime), of surrounding neighbourhoods and experiences of interethnic contact and feelings of ethnic threat shape perceptions of the ethnic outgroup size. We employ individual-level data from the 1Vandaag Opinion Panel enriched with contextual-level data from Statistics Netherlands (24,538 respondents in 3,113 neighbourhoods). Great variation in residents’ perceptions of the ethnic outgroup size exists both between neighbourhoods and within neighbourhoods. We demonstrate that native Dutch are more likely to overestimate the size of the non-Western minority population than the size of the Western minority population. Larger ethnic outgroup sizes in surrounding neighbourhoods are associated with the sense that one’s own neighbourhood also contains more minority residents. In economically deprived and high crime neighbourhoods, residents are more likely to overestimate the size of the ethnic outgroup. Furthermore, people with more interethnic contact and people who experience more ethnic threat provide higher estimations and are more likely to overestimate the ethnic outgroup size in their neighbourhood.