Transgender individuals face high levels of stereotyping, prejudice, discrimination, and violence. However, there is a paucity of research (particularly experimental work) investigating the magnitude of gender identity bias (GIB) targeting transgender individuals, as well as interventions designed to ameliorate it. To address this gap, we conducted experimental investigations of reactions to identical, highly qualified men or women job applicants described as either transgender or cisgender (Experiments 1a, 1b), and tested the efficacy of an imagined intergroup contact (IIC) intervention (relative to a control condition) in ameliorating GIB against transgender women (Experiment 2). As expected, all applicants were perceived as equally highly competent, adding to the literature suggesting that clearly demonstrating excellent qualifications can prevent biased judgments of candidate competence. However, revealing GIB, transgender men and women were rated as less likeable and hirable than the identical cisgender applicants, despite the fact that they were viewed as equally competent (Experiments 1a, 1b). Providing additional evidence of GIB, in the absence of IIC, participants rated a transgender female applicant as less likeable and hirable than the identical cisgender applicant, and also reported less self‐other overlap and perspective taking for the transgender applicant (Experiment 2). However, these target gender identity differences were reduced (for likeability) or fully eliminated (for the remaining outcomes) in the IIC condition. Put another way, while reactions to the cisgender applicant were unaffected by intervention condition, IIC elevated perceptions of the transgender applicant, suggesting that it may function as an effective GIB intervention.