Researchers infrequently have focused on assessing the degree to which the changes in welfare policy legislated during the 1990s have affected immigrants' receipt of welfare. Using data from the March Current Population Survey, we analyze the contribution of local labor market conditions to the explanation of relative declines in immigrants' receipt of welfare from 1994 to 2000. The results of a series of models that included labor market-area and state fixed effects indicate that employment and unemployment rates across metropolitan statistical areas and states account for at least one-third of the observed relative decrease among immigrants. The policy implications of the findings are discussed.