South Africa's negotiated settlement and its transition to democracy reads like a modern fairy tale. A brief review of South Africa's social indicators serves to temper some of optimism about the country's future. The indicators reflect the society's quality of life which has been shaped by its turbulent history. Political "caste formation", changing political alliances, the reforms intended to forestall the demise of apartheid, and the race for global competitiveness have left indelible marks on the society's social indicators. A comparison of living conditions in South Africa with those of roughly comparable economies indicates that the country lags behind in securing overall and widespread socio-economic upgrading of the population at large. A review of a cross-section of South African indicators and their trends over time shows that South Africa is still a very deeply divided society with a very large backlog in socio-economic development. There is evidence of breakdown in the society's social cohesion. Popular expectations of future quality of life indicate that the euphoria following on the first democratic elections has been replaced by a sense of realism among all sectors of the population. It is concluded that quality of life as reflected in South Africa's social indicators may get worse before it improves. The challenge will be to avoid new forms of economic "apartheid" which would depress the quality of life of marginal sectors of the population at the expense of the economically privileged.