Racism rears its head in Maycomb when a white woman, Mayella, accuses a black man, Tom Robinson, of rape.
When Atticus Finch is called on to defend Robinson, he knows from the start it's a lost cause even though Robinson is innocent of the crime. To his mind, racism has such a long history in the South that he can't expect it to be overcome. Nevertheless, Atticus does his best to defend his client. His robust defense of Robinson contributes to ripping the town apart, for in Maycomb whites expect whites to side with each other, no matter what the truth of a situation. Friends turn against Atticus, perceiving him as a race traitor.
The effects of this attitude emerge when a white man, Mr. Cunningham, attacks Atticus for defending Mr. Robinson. Atticus defends Cunningham to his children, saying he "just has his blind spots like the rest of us," and noting Cunningham was excited because he was part of a mob, but the novel makes the larger point that racism blinds people and potentially turns them into monsters.
Racism in the town long preceded the trial. Scout's Aunt Alexandra, for example, is a racist who perceives the Finch family maid, Calpurnia, as a lesser human being because of her skin color. Alexandra fears Calpurnia's influence on Scout because she is unable to look past Calpurnia's race to see the goodness of her soul.
Racism also leads to a mindset in which people become suspicious of anyone who is different. For example, people fear Scout's young friend, Boo Radley, just because he seems a little strange. This kind of fear stunts the lives of whites as well as blacks.
But more importantly, racism leads to the imprisonment and death of Tom Robinson, an innocent man, because notions of maintaining racial purity and separation have become more important than black lives.
In a nutshell, racism causes innocent blacks to be convicted of crimes they did not commit, sets whites against whites, blinds whites to the good in black people and motivates whites to fear anyone who seems different from the norm, whether black or white. Racism is rooted deep in the American psyche, formed by the long history of American slavery from which the country has yet to recover.