Research on the role of neighbourhood-level deprivation in low- and middle-income countries with respect to tobacco use is relatively nascent. In South Africa, where race and deprivation are closely linked due to the history of apartheid, smoking disparities exist by individual risk factors such as gender, race, and socioeconomic status. However, less is known about how community-level factors affect smoking disparities in the country, or how the relationship between deprivation and smoking differs by race. We used data from the 2008 South African National Income Dynamics Study (NIDS) and Poisson generalised estimating equations to assess the relationship between neighbourhood deprivation and current smoking for individuals nested within neighbourhoods, while controlling for individual-level and household-level covariates. Subgroup analyses for racial categories Black and Coloured were performed. We found that the relationship between neighbourhood deprivation and smoking prevalence was non-linear: the smoking prevalence ratio was highest among those in the middle range for our deprivation index, and lower at extremely high and low levels of deprivation. Both Black and Coloured subsamples exhibited this inverted U-shape, although the relationship was weaker in the latter group. That the relationship between neighbourhood deprivation and smoking is non-linear contrasts with what has been found in high-income countries, where the relationship between neighbourhood deprivation and smoking is linear. Moreover, these findings are relevant to assess the potential differential impact of smoking interventions as a function of socioeconomic and environmental context.