This paper assesses trends in spatial inequality and polarization in Ghana over the period of economic reform. It contributes to the existing literature in three ways. First, it focuses on the spatial dynamics of inequality in Ghana. Secondly, it introduces the concept of polarization to the income distribution-welfare dialogue in Ghana. Finally, it proposes an index for measuring the share of spatial variation in changes in total inequality, as well as determining which spatial dimension primarily affects the variation in total inequality. The results establish that the Ghanaian population is clustered and that polarization is increasing in Ghana. The differences within-group specific means are considerably larger than the between-group components in explaining static levels of interpersonal inequality. However, changes in the levels of inequality are principally driven by changes in the between-group, i.e. the spatial, component of inequality. This suggests that inequality in Ghana may be assuaged by formulating regional policies directed at reducing down-side fluctuations in spatial inequality.