We report research implicating nostalgia as an intrapersonal means of warding off the stigmatization of persons with mental illness. We hypothesized and found that nostalgia about an encounter with a person with mental illness improves attitudes toward the mentally ill. In Experiment 1, undergraduates who recalled an encounter with a mentally ill person while focusing on central (vs. peripheral) features of the nostalgia prototype reported a more positive outgroup attitude. This beneficial effect of nostalgia was mediated by greater inclusion of the outgroup in the self (IOGS). In Experiment 2, undergraduates who recalled a nostalgic (vs. ordinary) interaction with a mentally ill person subsequently showed a more positive outgroup attitude. Results supported a serial mediation model whereby nostalgia increased social connectedness, which predicted greater IOGS and outgroup trust. IOGS and outgroup trust, in turn, predicted more positive outgroup attitudes. We ruled out alternative explanations for the results (i.e., mood, perceived positivity, and typicality of the recalled outgroup member). The findings speak to the intricate psychological processes underlying the prejudice‐reduction function of nostalgia and their interventional potential. Copyright © 2013 John Wiley & Sons, Ltd.