This paper examines the production of neoliberal multiculturalism in Chile as well as ideas about race, ethnicity and nation mobilised among local elites in the Chilean South. It argues that the process of creating neoliberal multicultural citizens is not only imposed from above, but also informed by local histories, attitudes and social relationships. Official neoliberal multiculturalism is shaped by transnational and national priorities, and involves constructing some Mapuche as terrorists while simultaneously promoting multicultural policies. Local elites contribute to the shape that neoliberal multiculturalism takes on the ground by actively feeding into the terrorist construction but refusing to consent to multicultural values. Altogether, understanding neoliberal multiculturalism depends on examining the transnational, the national and the local, and discerning the ways in which social forces at each level reinforce, interact with and depart from one another.