Gentrification is transforming the class and ethnic profile of urban communities across the world, and changing how people deal with social and cultural difference. This paper looks at some of the social consequences of gentrification in Sydney, Australia, focusing on local schools. It argues that in this urban Australian context, the influx of middle-class Anglo-Australians into traditionally working-class, migrant-dominated areas is significantly changing how people relate to each other within local schools, often fragmenting and dividing school communities. These shifts are intensified by the public policy of school choice, which has enabled some parents to bypass their local school for a more 'desirable' one. This paper presents a close local study of two schools within one gentrifying Sydney suburb, examining how the schools have become more polarised. In particular, we examine how this demographic polarisation has given rise to two distinct modes of 'doing diversity', namely, everyday and cosmo-multiculturalisms. While the former is about daily, normalised encounters across difference, the latter is a form of multiculturalism based on strategic and learned 'appreciation' and consumption of difference, characteristic of gentrified communities.