--- - |2 Abstract Research on residential diversification has neglected its impact on neighbourhood identity and overlooked the very different identity‐related experiences of new and existing residents. The present research examines how incoming and established group members relate to their changing neighbourhood in the increasingly desegregated city of Belfast, Northern Ireland. Thematic analysis of interviews with 24 residents (12 Protestant long‐term residents, 12 Catholic incomers) from an increasingly mixed neighbourhood identified asymmetrical concerns and experiences: Incomers reported undergoing an ‘identity transition’ between local communities, while long‐term residents faced an ‘identity merger’ within their neighbourhood. Where their identity concerns diverged, emergent intergroup perceptions of the residents were negative and divisive; where they accorded, positive intergroup perceptions and a shared neighbourhood identity evolved. From this, we propose a Social Identity Model of Residential Diversification (SIMRD) to encourage future research into how different identity concerns shape emergent intergroup dynamics between long‐term residents and incomers within diversifying neighbourhoods. - European Journal of Social Psychology, EarlyView.