Recent studies have reported that the variable of social categorization per se is sufficient for intergroup discrimination. This paper presents an explanation of these findings in terms of the operation of social comparison processes between groups based on the need for a positive ingroup identity. The relationship between perceived social identity and intergroup comparison is elaborated theoretically, and it is argued that social comparisons give rise to processes of mutual differentiation between groups which can be analyzed as a form of ‘social’ competition. Social competition is distinguished from realistic competition (conflict of group interests). New data is reported which strengthens this interpretation of the ‘minimal’ categorization studies. It is found that minimal intergroup discrimination takes place in the distribution of meaningless ‘points’ as well as monetary rewards and that social categorization per se does not lead to intergroup behaviour where the subjects can act directly in terms of ‘self’. Other studies on intergroup biases are reviewed to argue for the generality of social competition in intergroup situations.