Research has shown that intergroup contact is one of the most powerful approaches for improving outgroup attitudes. Further, it has been revealed that contact exerts its effects on prejudice reduction mostly by inducing positive affective processes. The present study (N = 146) investigated whether stereotype content enhancement along the core dimensions of competence, sociability, and morality might represent a basic cognitive mechanism driving the contact effects. Results showed that face-to-face encounters with immigrants increased their perceived competence, sociability, and morality. However, only increased perceived outgroup morality mediated the effect of contact on outgroup responses. Our findings extend prior research on the mediators of intergroup contact, showing the key role of perceived morality in driving the contact effects. The importance of these findings for improving intergroup relations is discussed.