This paper addresses the hypothesis derived from self-categorization theory (SCT) that the relationship between groups and stereotyping will be affected by the social structural conditions within which group interaction occurs. A mixed design experiment (n=56) measured low-status groups' stereotypes and preferences for conflict with a high-status outgroup prior to and after within-group discussion across varying social structural conditions. Over time, participants in [open] conditions consensualized around positive conceptions of the outgroup and endorsed acceptance of their own [low status] position. However, in [closed] conditions participants consensualized around positive conceptions of the ingroup, negative conceptions of the outgroup, and tended towards preferences for collective protest. It is argued that the data support S-CT's contention that stereotyping and group processes are fundamentally interlinked and that neither can be properly understood in isolation from the dynamics of the surrounding intergroup context. Copyright © 2004 John Wiley & Sons, Ltd.