<p>Professional identity is a complex concept that is understood and applied in various ways, and thus, what professional identity formation entails for health professions education remains unclear. The aim of this “reflections” paper is to clarify and build upon our current understanding of professional identity to inform professional identity formation in health professions education. We begin by elaborating on the concept of professional identity (and related concepts), how it is currently understood in the context of health professions, how it is shaped by the altruistic and pro-social ideals associated with the public beneficence function of health professions, and how this has been translated into an idealistic and moralistic approach to professional identity formation. We point out that tensions may arise from such an approach due to the fact that aspiring health professionals in today’s society may be primarily motivated by individualistic values and egoistic goals. The tensions will become increasingly acute given the complexity of healthcare needs of populations and the associated challenges and demands placed upon health professionals working within rapidly changing healthcare landscapes. We argue that navigating and reconciling such tensions is fundamental to professional identity formation and thus instead of an idealistic and moralistic approach, we propose a pragmatic approach, one that is based on a more sophisticated conceptualisation of professional identity and gives due consideration to the psychosocial processes involved in reconciling such tensions and the sociocultural contexts in which aspiring health professionals are embedded. The pragmatic approach emphasises the need for alignment between a health professional’s individualistic values and egoistic goals, and the public beneficence function of their chosen profession, as a foundation for ongoing professional identity formation throughout their career span.</p>