The prediction from several theories of interpersonal relations that intergroup similarity would lead to less differentiation and more attraction was contrasted to a hypothesis from Social Identity Theory which predicts the opposite outcome. In Expt 1, groups of schoolchildren expected to interact cooperatively with one another. The perceived characteristics of the out‐group were varied in a 3 times 2 design. The independent variables were out‐group Status (higher vs. same vs. lower relative to the in‐group), and its prevailing Attitudes (similar to vs. different from those in the in‐group). Evaluations of anticipated performance and liking clearly supported the similarity–attraction hypothesis. But on a Prisoner's Dilemma measure, more competition was observed against the similar group, as predicted by Social Identity Theory. In Expt 2, using a similar design, a third independent variable was incorporated: the nature of the Task (cooperative vs. competitive). Unexpectedly, this factor had few effects in isolation and its predicted interaction with similarity was not observed. But further analysis revealed that subjective goal orientation may be an important variable: similarity led to intergroup attraction only for non‐competitive subjects; for competitive subjects the reverse was true. It was concluded that similarity may perform different functions in differe