As the United States continues to diversify, we review research on both the benefits and challenges of diversity in developmental science. Taking a "contact in context" approach, we focus on the ways that structural and interpersonal diversity influence ethnic/racial developmental processes and outcomes from early childhood to adolescence. We also consider the ways in which a child's own ethnicity/race may shape diversity experiences and outcomes over time. Although we review both the benefits and challenges of moving toward diversity, we offer this review with the ultimate goal of optimizing benefits and minimizing challenges. We offer a conceptual model of "contact in context" that integrates diversity at multiple levels, child ethnicity/race, and developmental changes over time. We conclude with recommendations for future research including: development of more nuanced measures that incorporate multiple levels of diversity, time, and child's ethnicity/race.