Research indicates that concentrated neighborhood poverty has numerous detrimental effects on the health and well-being of individuals, families, and communities. The term “neighborhood effects” has been used to describe the interaction between socioeconomic disadvantage and social problems at the neighborhood level. Social capital theory, defined broadly as social networks characterized by trust and reciprocity represents one prominent explanation for the phenomenon of neighborhood effects. Within poor neighborhoods, it is theorized that socioeconomic characteristics of the neighborhood foster inadequate social capital and it is this low level of social capital that leads to the phenomenon of neighborhood effects. In order to explore the utility of social capital theory in explaining neighborhood effects, this paper argues for an ecologically-grounded model of social capital that allows for the different ways in which social capital operates within different types of neighborhoods. Implications for social work practice, policy and education are discussed.