Systems of human social categorization vary markedly across contexts, cultures, and time. The present talk will discuss how children develop beliefs that particular, culturally relevant criteria mark fundamental, stable, and informative differences between people. Part 1 will examine how subtle linguistic cues lead children ages 2-5 to treat otherwise arbitrary criteria as marking distinct kinds of people. Part 2 will examine the consequences of these beliefs for children’s category-relevant beliefs, attitudes, and behavior. Finally, Part 3 will present new research on how to counteract some of the negative consequences of these processes to promote positive development.