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To assess predictions from social identity development theory (SIDT; Nesdale, 2004) concerning children's ethnic/racial prejudice, 197 Anglo-Australian children ages 7 or 9 years participated in a minimal group study as a member of a team that had a norm of inclusion or exclusion. The team was threatened or not threatened by an out-group that was of the same or different race. Consistent with SIDT, prejudice was greater when the in-group had a norm of exclusion and there was threat from the out-group. Norms and threat also interacted with participant age to influence ethnic attitudes, although prejudice was greatest when the in-group had an exclusion norm and there was out-group threat. The implications of the findings for SIDT are discussed.