Perceivers individuate cognitively the ingroup more than the outgroup; that is, perceivers use person categories to process information about the ingroup, but use stereotypic attribute categories to process information about the outgroup. This phenomenon is labelled the differential processing effect (DPE). Is the DPE moderated by relative group status? In two experiments, either high- or low-status members of permeable-boundary groups (i.e. groups that encourage upward mobility) read through information about unfamiliar ingroup and outgroup members. Relative group status moderated the DPE. Clustering indices in recall and confusions in a name-matching task indicated that high-status members individuated the ingroup more than the outgroup, thus replicating the DPE. However, low-status members individuated the outgroup more than the ingroup, thus reversing the DPE. A third experiment suggested that these findings are predicated on the ingroup information being stereotype-consistent. © 1997 John Wiley & Sons, Ltd.