This study examined the way Jewish and Arab children in Israel perceive their in-group and the respective out-group. The sample consisted of 365 children, 166 Jews and 199 Arabs, from two age groups, 7 to 8 and 11 to 13. Images of "a Jew" and "an Arab" were assessed using human figure drawings (HFD) and a related questionnaire that were scored on the dimensions of structure and content. Based on developmental and contextual perspectives and previous findings, it was hypothesized that younger children in both ethnic groups would favor the majority group, whereas early adolescents would favor their in-group and reject the outgroup. The hypothesis was confirmed for the Jewish children. Arab children demonstrated rare differentiation between the images. The findings are discussed in relation to cognitive development and the different contextual influences in the two groups: the Israeli-Arab conflict for Jewish children and minority status for Arab children.