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We examined the impact of intergroup similarity on two aspects of intergroup relations. Drawing on social identity and belief congruence theory, we hypothesized that — at high levels of intergroup similarity — increasing similarity has dual, seemingly opposed effects: It increases ingroup favouritism in evaluations but also increases readiness for social contact with the outgroup. We further hypothesized that both effects are moderated by the strength of individuals' identification with their ingroup. Finally, we hypothesized that there is ingroup favouritism on dimensions relevant for defining the group, but outgroup favouritism on dimensions irrelevant for this purpose. One hundred and forty‐nine students from two prestigious high schools, who were assigned to one of three levels of manipulated similarity between their schools, evaluated both schools on dimensions relevant and irrelevant to the school context and …