This study tested predictions drawn from social identity development theory (SIDT) (Nesdale, 1999a) concerning the development of young children's ethnic attitudes. 5-7- and 9-year-old children (N = 159) participated in a minimal group study in which they were assigned to a team which had higher drawing ability than a competitor team. The team members were revealed to be of the same (Anglo-Australian) vs. different (Pacific Islander) ethnicity (in-group ethnicity). The ethnicity of the competitor team was varied in the same way. The children subsequently rated their liking for, and similarity to, the in-group and the out-group, and the extent to which they wished to change groups. Children liked in-group members more than out-group members. Liking for in-group members was unaffected by the ethnic composition of the groups, but liking for outgroup members was reduced when the ethnic composition of the out-group differed from that of the in-group. Children felt most similar to same-group, same-ethnicity members and least similar to different ethnicity out-group members. The desire to change teams increased with age but there was no intention to align with same ethnicity individuals. The extent to which the findings provide support for SIDT is discussed.