Threat has been proposed as an important cause of prejudice with social identification moderating its effects. In the context of the expansion of the European Union, two studies (N = 216 students and N = 107 non-students) examined how people with different levels of subgroup and superordinate identification respond to threats from an outgroup nested within the same superordinate category as the ingroup. Across experiments, a consistent finding was that participants who strongly identified with the subgroup (Germany) and the superordinate group (Europe) at the same time were most susceptible to a subtle manipulation of threat. Among these participants, threat increased prejudice (Studies 1 and 2) and ingroup projection (Study 2). Findings are discussed with regard to theoretical models of subgroup relations, especially the ingroup projection model, as well as the European integration process. Copyright © 2006 John Wiley & Sons, Ltd.