Race riots in the town almost a decade ago (wikipedia link added by me, not in original article) revealed deep divisions between its white and Asian populations. The Home Office said it was a place of "deep-rooted" segregation, with communities leading "parallel lives".
Nine years on, many feel little has changed, and some fear the education of Oldham's children could be overshadowed by potential racial conflict. Newsnight's Catrin Nye talks exclusively to the parents and pupils affected.
Thirteen-year-old Hannah Coombes lives with her mother, Jean, in what many call the "white area" of Oldham, in Greater Manchester.
The aspiring actress attends a school that is more than 90% white, and she admits she gets scared when driving through Asian areas to get to her drama class on a Friday.
"You should feel you can go to any area of the town you live in and feel safe, but that's not the way it is," her mother Jean says with regret. "In Oldham there isn't a community any more, it's like it's split in two."
Mother and daughter agree the resentment towards the Asian community cited by the Home Office report after the 2001 riots still exists in the town's white communities.
"That really is a view of quite a few people round here," Jean says.
In an attempt to get over this mutual fear and resentment, Hannah's school, Counthill, is on the cusp of merging with Breeze Hill - a school that is more than 90% Asian. Come September, it will be known as the Waterhead Academy.
Yet, Hannah confesses she does not know where Breeze Hill is, even though it is only five minutes drive from her house.
Hifsa Munir, who lives in the Asian part of town with her father Mohammed, is one of Breeze Hill's pupils. And, just like Hannah, she also talks of Oldham's divisions.
"There are a lot of white people who are quite racist - they don't like us Asians," the Year 7 pupil says.
"My friends think they're going to be racist towards them because they're Asian and they just don't like them."
Asked whether the prejudice works both ways, she says: "Yeah, they don't like us, so then we won't like them."
Hifsa's father describes how the white and Asian communities are living "separate lives", and tells of his concerns about the impact these divisions are having on his daughter, who is apprehensive about the merger of the two schools.
"Unfortunately that's an example of the prejudice within children," he says.
"Hopefully what Hifsa has said is not going to happen. But that demonstrates the prejudice within the Asian community, and I'm sure it reflects the prejudices within the white community."
Oldham's schools are among the most segregated in the country, and the town's local authority fears another generation of white and Asian young people are growing up without any real relationship with each other.
Alun Francis, the principle of Oldham College - the Waterhead Academy's sponsor and a college where teenagers of all ethnicities already share lessons - is hopeful the merger will work.
"Everything we can do to make this successful we think we either have done or are doing," he says.
'Not a risk'
For the first two years at least, the Waterhead Academy, will run from the existing two schools' sites, but pupils will share a uniform, sports facilities and some lessons.
"I can't see how we could be accused of taking a risk, because we're not offering anybody anything worse," says Mr Francis. "Generally speaking we'll keep things at least the same, and hopefully very much better."
Yet fears are still running high. Hannah and mother Jean fear education could be overshadowed by potential racial conflict.
"It's going to be too stressful for everybody," says Hannah.
"Everybody's going to get annoyed, start taking their anger out on one another and that's where the racism will start."
There is also scepticism from teachers.
Counthill's current headmaster, David Lack, believes young people need to be brought together at a much younger age, not when they are in their teens.
"The way to do it is to start with the primary schools," he says. "To start with pupils that are 11, 12, 13, 14 years old and to suddenly bring them together in one school when you know there's been the racial tension that there's been in Oldham - it could pay off… but do you experiment with children?"
Although the pieces are in place for the new multi-racial academy to open in September, no-one quite knows exactly what is going to happen.
But many hope the project will become a model for uniting other communities divided by race or religion.
Among them is Charlie Parker, chief executive of the local authority, Oldham Borough Council, who says he is fully aware of the challenge ahead.
"We do have a whole lot of history that we've got to deal with. But what we're not going to have is a situation where we don't understand the issues, we don't address them, and we don't work within those communities to make sure this is a success," he says.
Mr Parker objects to be project being branded social engineering, instead arguing that it is about improving educational attainment in Oldham, while at the same time dealing with long-standing race issues.
"Let's be clear, there will be people who will be nervous and worried and concerned," he says.
"We have to allay those fears. But that doesn't mean to say it's fundamentally wrong."
Despite the cynicism, some parents and pupils are looking forward to the potential of the project.
Gordon Cowie and his son, Robbie, live on a street between the two merging schools.
"It's the unknown isn't it - where children don't know about something then they're a bit nervous about it," Gordon says. "But once they learn about it - children are children - they just get on don't they?"