Metabolic interactions between populations can influence patterns of spatial organization and diversity within microbial communities. Cross-feeding is one type of metabolic interaction that is pervasive within microbial communities, where one genotype consumes a resource into a metabolite while another genotype then consumes the metabolite. A typical feature of cross-feeding is that the metabolite may impose toxicity if it accumulates to sufficient concentrations. However, little is known about the effect of metabolite toxicity on spatial organization and local diversity within microbial communities. We addressed this knowledge gap by experimentally varying the toxicity of a single cross-fed metabolite and measuring the consequences on a synthetic microbial cross-feeding community. Our results demonstrate that metabolite toxicity slows demixing and thus slows local diversity loss of the metabolite-producing population. Using mathematical modeling, we show that this is because toxicity slows growth, which enables more cells to emigrate from the founding region and contribute towards population expansion. Our results show that metabolite toxicity is an important factor affecting local diversity within microbial communities and that spatial organization can be affected by non-intuitive mechanisms.