This chapter examines the psychological and neurobiological correlates of ingroup and outgroup formation and intergroup conflict. We look at the social psychological and sociological theories as well as more recent empirical evidence around strong group formation and prejudice. The chapter also uncovers several important mitigating factors and some experimental approaches to reducing bias and conflict. We conclude with a look at how these findings and their application to the problem of Islamophobia might carry clinical implications for psychiatrists treating patients from marginalized Islamic populations.