The self-esteem hypothesis in intergroup relations is a continuing source of controversy. The present study aims to clarify some of the divergence in findings by means of self-categorization theory and by looking at the positive-negative asymmetry in social discrimination. The focus is on the level of identity (personal as well as national) and in-group favoritism in the positive and negative domain. In an experimental questionnaire study among Dutch participants, personal self-esteem was found to predict in-group favoritism when personal identity was salient, whereas national self-esteem was found to be a predictor when national identity was salient. These effects were found for the negative trait dimension, but not for the positive one. In addition, in-group favoritism on positive traits was seen to lead to a momentary increase of self-esteem, whereas in-group favoritism on negative traits led to decreased momentary self-esteem. These outcomes for self-esteem were found under the condition of national identity salience.