The role of intergroup contact and ethnic identity in forming stereotypes was investigated in a military setting. The samples included 535 immigrant soldiers, serving in immigrant-only, combat, and administrative units. Participants rated their ethnic identity and their perception of in-group and out-group soldiers. Significant effects were found for unit type, ethnic identity (low vs. high), and the interaction between these variables. In-group perceptions were more positive than out-group perceptions. Interdependence is important for enhancing out-group perception and, unlike contact, buffers the negative effect of ethnic identity on out-group perception.