To illuminate how race affects the usage of punitive tools in policy implementation settings, we analyze sanctions imposed for noncompliant client behavior under welfare reform. Drawing on a model of racial classification and policy choice, we test four hypotheses regarding client race, local context, and sanctioning. Based on longitudinal and cross-sectional multilevel analyses of individual-level administrative data, we find that race plays a significant role in shaping sanction implementation. Its effects, however, are highly contingent on client characteristics, local political contexts, and the degree to which state governments devolve policy control to local officials.