This article examines the intertwining of neoliberal urbanism and education policy in Chicago. Drawing on critical studies in geography, urban sociology and anthropology, education policy, and critical analyses of race, the author argues that education is constitutive of material and ideological processes of neoliberal restructuring, its contestation, and the struggle for a new urban social imaginary. The paper focuses on neoliberalization of education as a social process. The data show that education policy is constitutive of racialized restructuring of urban space and managerial governance of the public sphere. While capital is a central actor, neoliberal policy also works its way into the discourses and practices of education through actions of marginalized and oppressed people working within constraints of the present situation. This suggests the need to address the (Gramscian) "good sense" of neoliberal policy in a counter-hegemonic struggle for the city. (Contains 7 notes.)