This interdisciplinary conceptual study discusses significant implications for psychological functioning of the heterogeneous historically based socio-cultural contexts that are intrinsic to different societies and cultures. Promoting deeper inquiry into the complexity of diversity viewed as a resource, this article elucidates its propositions by examples using observable circumstances concerning various populations, previous literature relevant to the topic, and selected findings from research conducted with 40 Native American academics. In particular, this article contributes novel insights concerning the importance for identity construction and experiencing of the fact that the status of Native American tribal nations is politically and legally unique, and their situation historically and socio-culturally in many regards different from that of ethnic minority populations. Correspondingly, master narratives that fundamentally favor either full inclusion into the dominant society or the idea of tribal sovereignty and self-determination seem to facilitate distinct ways of construction and experiencing of qualitatively different identities. Some of these are conducive to constructive interpretation, integration, and coping within mutually incongruent socio-cultural contexts. Master narratives that carry such potential under adverse circumstances constitute an important asset within the contemporary ever more diverse, yet interconnected societies.