The gentrification that has transformed high-poverty neighbourhoods in US cities since the mid 1990s has been characterised by high levels of state reinvestment. Prominent among public-sector interventions has been the demolition of public housing and in some cases multimillion dollar redevelopment efforts. In this paper, the racial dimension of state-supported gentrification in large US cities is examined by looking at the direct and indirect displacement induced by public housing transformation. The data show a clear tendency towards the demolition of public housing projects with disproportionately high African American occupancy. The pattern of indirect displacement is more varied; public housing transformation has produced a number of paths of neighbourhood change. The most common, however, involve significant reductions in poverty, sometimes associated with Black to White racial turnover and sometimes not. The findings underscore the central importance of race in understanding the dynamics of gentrification in US cities.