We examine the question of whether living in a disadvantaged neighborhood damages health, over and above the impact of personal socioeconomic characteristics. We hypothesize that (1) health correlates negatively with neighborhood disadvantage adjusting for personal disadvantage, and that (2) neighborhood disorder mediates the association, (3) partly because disorder and the fear associated with it discourage walking and (4) partly because they directly impair health. Data are from the 1995 Community, Crime, and Health survey, a probability sample of 2,482 adults in Illinois, with linked information about the respondent's census tract. We find that residents of disadvantaged neighborhoods have worse health (worse self-reported health and physical functioning and more chronic conditions) than residents of more advantaged neighborhoods. The association is mediated entirely by perceived neighborhood disorder and the resulting fear. It is not mediated by limitation of outdoor physical activity. The daily stress associated with living in a neighborhood where danger, trouble, crime and incivility are common apparently damages health. We call for a bio-demography of stress that links chronic exposure to threatening conditions faced by disadvantaged individuals in disadvantaged neighborhoods with physiological responses that may impair health.