This chapter examines the traditional definition of ‘intercultural competence’ and argues that it is time for research to move towards a more expansive definition of this term. Drawing primarily on perspectives provided by the disciplines of psychology and intercultural education, we propose an alternative definition of intercultural competence. The concepts of ‘culture’, ‘intercultural’ and ‘competence’ which underpin this definition are analysed. It is argued that all individuals have multiple cultural affiliations, but whether or not any given situation is intercultural depends on the extent to which these affiliations are salient to the participants within the situation. The factors that influence the salience of people’s cultural affiliations are discussed. The chapter also provides a description of the components of intercultural competence, and it is proposed that there are specific values that are intrinsic to intercultural competence—valuing human dignity and rights, and valuing cultural diversity—which are frequently overlooked by researchers. It is also proposed that greater attention needs to be paid to the role of respect in intercultural situations. In general, the approach that is advocated in the chapter emphasises the dynamic and context-dependent nature of intercultural competence as it is used and applied within concrete situations, which do not always involve bidirectional communication.