Many conflicts in the world have a communal nature, reflecting mutually incompatible perceptions and expressions of differences among groups with diverse ethnic and religious affiliations. Such identity bases as ethnicity, tribe, kin, class, caste, gender, and race have often contributed to the justification of inequality in resource allocation and political oppression. This has been a main source of social division and tension ranging from China to Sudan to Burma to India to Saudi Arabia to Bolivia. Identity differences in heterogeneous societies have been used as a basis for diverse types of group mobilization. As one of the most vivid examples of the manipulation of identities for political purposes, the Sudanese government has employed Arab nationalism in pitting the Janjaweed militias against ethnic African Darfurians. In contrast with its use for agitating political violence, identity can also be invoked to call for unity and solidarity when groups go through grievances or bereavement. In fact, a sense of “we-ness” is often sought in a healing process after such tragic incidents as the terrorist bombings in New York. Thus identity tends to be strengthened in response to the loss of communal members as well as external challenges to the group’s values and behavior. In the expansion of the European Union, on the other hand, a superordinate identity base of being “European” has been promoted in overcoming national, ethnic differences and advancing the common cause of democracy, social harmony, and economic prosperity. This chapter examines the activation of identity for conflict, the formation of attitudes, and the process of social categorization. It also covers the ways in which the fluid nature of identity can be transformed by conflict resolution. Identity boundaries become more rigid with the intensification of struggles, but can be relaxed with benevolent interaction between different group members. People of diverse social categories cooperate or compete, depending on economic and political status as well as value differences.