This chapter offers a pathbreaking urban history of the Ethiopia–Somalia borderlands. Eastern Ethiopia’s cultural distinctions and tense interethnic relations are often described in terms of broad contrasts between Somali nomadic pastoralism and the sedentary agriculture of Ethiopian highland populations. A close reading of historical accounts tells a different story. Beginning with a discussion of present-day ethnic competition and cooperation in the marketplace, I trace Jigjiga’s social relations back in time, showing how towns including Jigjiga have been crucial sites of interethnic encounters, identity formation, and cultural change. Shifting the focus away from Ethiopia’s tense history of ethno-territorial politics, I suggest that in the city, everyday interactions between identity groups are significantly shaped by expectations about transactability: who is trustworthy, who is not, and who is a legitimate target for cheating or for collaboration. This argument places urban encounters at the center of understanding the salience of ethnic and clan identities in eastern Ethiopia. I argue, furthermore, that urban encounters in Jigjiga play an important role in how distinct identity groups relate to geopolitical borders outside the city and have done so throughout Jigjiga’s history.