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Empirical literature has shown that narcissism is often associated with limited empathy, but the mechanism underlying this association is still unclear. The present study investigated the role of identity instability as a mediator of the relationship between narcissistic traits and empathic capabilities. Narcissistic traits, identity instability, and cognitive and emotional empathic capabilities were assessed among 462 nonclinical participants through self-report measures. Results showed a positive association between narcissistic traits and cognitive empathy. On the other hand, a negative association between narcissistic traits and emotional empathy emerged. Furthermore, the study showed that the association between narcissistic traits and impairments in emotional empathy was partially explained by identity instability. Results thus demonstrated that narcissistic traits were associated with higher identity instability, and this, in turn, was associated with decreased abilities to be emotionally involved in others’ affect states. These findings are discussed in the context of an object relations formulation of narcissistic personality.