Two mechanisms have been proposed to account for the difficulty in recognizing faces of other racial groups (the other-race effect; ORE): perceptual expertise and social cognitive factors. Focusing on the social cognitive factors alone, we manipulated in-group and out-group memberships based on two social categories (nationality and university affiliation), and controlled for perceptual expertise by testing Caucasian participants with Caucasian faces only. Using event-related potentials (ERPs) and focusing on the N170, a brain electrical component sensitive to faces, we provide for the first time strong support for the social cognitive influence on face processing within 200 ms. After participants learned the social categories, the N170 latency differentiated between double in-group and double out-group faces, taking longer to process the latter. In comparison, without group memberships, there was no difference in N170 latency among the faces. These results are consistent with recent findings of behavioral and imaging research, providing further support for the social cognitive model and its potential for understanding ORE.