What possibilities exist for collective action among marginalised people? Through participatory action research (PAR), we study possibilities for collective action among people affected by homelessness and substance use. We describe the process of collective action in a single case, the X-street project, and scrutinise how collective identity can contribute to understandings of collective action. Findings of collective identity in boundary work, consciousness-raising and negotiations suggest that identity work and collective action are closely linked in processes of empowerment and created in mutually reinforcing processes. The case shows that the group succeeded in building a collective action project by simultaneously challenging its members’ public identity and providing them with home and work. More research is needed about the processes of collective action, and the relationship between material change and identity work.