We study whether the spatial distribution of natural resources across different ethnic groups within countries causes spatial inequality and the incidence of armed conflict. By providing a theoretical rent-seeking model and analysing a set of geo-coded data for mines, night-time light emissions, local populations and ethnic homelands, we show that the spatial distribution of resources is a major driving factor of ethnic income inequality. Moreover, a spatially unequal distribution of natural resources induces rent-seeking behaviour and thus increases the risk of civil conflicts. Consequently, we extend the perspective of the resource curse to explain cross-country differences in income inequality and the onset of civil conflicts.