When
$p$ is inert in the quadratic imaginary field
$E$ and
$m<n$, unitary Shimura varieties of signature
$(n,m)$ and a hyperspecial level subgroup at
$p$, carry a natural foliationof height 1 and rank
$m^{2}$ in the tangent bundle of their special fiber
$S$. We study this foliation and show that it acquires singularities at deep Ekedahl–Oort strata, but that these singularities are resolved if we pass to a natural smooth moduli problem
$S^{\sharp }$, a successive blow-up of
$S$. Over the (
$\unicode[STIX]{x1D707}$-)ordinary locus we relate the foliation to Moonen’s generalized Serre–Tate coordinates. We study the quotient of
$S^{\sharp }$ by the foliation, and identify it as the Zariski closure of the ordinary-étale locus in the special fiber
$S_{0}(p)$ of a certain Shimura variety with parahoric level structure at
$p$. As a result, we get that this ‘horizontal component’ of
$S_{0}(p)$, as well as its multiplicative counterpart, are non-singular (formerly they were only known to be normal and Cohen–Macaulay). We study two kinds of integral manifolds of the foliation: unitary Shimura subvarieties of signature
$(m,m)$, and a certain Ekedahl–Oort stratum that we denote
$S_{\text{fol}}$. We conjecture that these are the only integral submanifolds.