Geographic patterns of poor health and mortality risk are found in most countries. Important health effects at the neighborhood level are mortality, general health, illness and disabilities, mental health, and healthcare utilization. Awareness of the influence of social class on health has been growing during the last decades. Studies show that individuals with lower socioeconomic status (SES) have a shorter life expectancy than do their 'well-off' counterparts. Yet SES-related health inequalities cannot be fully explained by individual characteristics, and environmental qualities should be taken into account. Many aspects of local areas that might be related to health or access to opportunities to live healthily are systematically poorer in socially disadvantaged areas. Such factors have the potential to explain health differences between deprived and prosperous neighborhoods. Investigating health differences at the neighborhood level implies conceptual as well as methodological issues pertaining to selection, accumulation, multiple level measurement, objective features versus perceptions, and time dynamic aspects. This article reviews such issues and evaluates several exemplary theoretical approaches from the fields of public health and environmental health in their ability to overcome such problems.