Many Americans believe that the country is deeply divided over politics and that polarization will only get worse. Americans also tend to overestimate the degree of polarization and political extremism. Such exaggerated perceptions of polarization are widespread, but we know little about their effects on our society. Existing studies on perceived polarization have tended to focus on its effects on political attitudes and behavior (e.g., whether it leads to actual polarization), yet its impact outside the political sphere remains largely unknown. I argue that people’s perceptions of polarization matter, often above and beyond actual polarization. My dissertation addresses the consequences of perceived polarization for the quality of America’s social fabric. Specifically, I focus on two factors that are essential for social cohesion: social trust (generalized trust in fellow citizens) and cross-cutting contact (interactions across group boundaries). They serve as a social glue that binds people together, as both elements foster positive and tolerant attitudes toward those outside one’s small circle and promote a sense of togetherness among members of society. Is the public perception of polarization detrimental to social trust and cross-cutting contact? My first two studies use data from a nationally representative panel study and an experiment to demonstrate that perceiving greater polarization and extremism undermines Americans’ trust in each other. I find that perceived polarization makes people more skeptical of the good intentions of others and less likely to cooperate for the benefit of the collective. My third study focuses on the role of perceived polarization in limiting cross-cutting contact. To the extent that perceived polarization causes people to be less trusting and more critical of others, it could also negatively impact their willingness to interact with others, especially those unfamiliar and dissimilar to themselves. Using an experiment, I show that perceptions of polarization make people more responsive to social cues that signal attitudinal dissimilarity, which leads them to avoid those of differing political views early in the acquaintanceship phase. People who perceive the country as polarized are more averse to forming social ties and interacting across political lines, reducing opportunities for cross-cutting communication. My dissertation demonstrates that people’s perceptions of polarization have far-reaching consequences beyond the realm of politics and into their everyday lives. In turn, these social consequences have important ramifications for society’s ability to work together towards achieving common goals and bridging social and political divides.