People tend to misclassify ambiguous individuals as members of the out-group rather than the in-group. This in-group overexclusion effect (IO effect) is thought to occur because people are motivated to maintain their in-group's positivity by protecting it from potential out-group intrusions. The present research tested this explanation by asking university students (N = 122) to complete a self-esteem scale and then recall the group memberships of individuals who belonged to minimal groups. Consistent with predictions, participants misassigned significantly fewer individuals to the in-group than to the out-group when the in-group was positive and the out-group was negative but not when these valences were reversed. In addition, self-esteem negatively predicted the IO effect. Alternative explanations of the IO effect are discussed.