This article aims at gaining a better understanding of how, in a market environment, categorized actors construct their identity in relation to the category to which they are assigned. Drawing on extensive fieldwork conducted at eBay, we consider how the newly categorized ‘business sellers’ connected eBay’s framing of the category (categorical framing) to their subjective interpretations of it (categorical self). We find that business sellers perceived varying levels of discrepancy between categorical framing and categorical self, which led them to engage in processes of identification, identity work and disidentification. Based on our findings, we present a framework relating the level of perceived discrepancies to distinctive paths of identification and we draw implications for understanding the interaction of categorization and identification. The framework highlights how feelings of self-enhancement, injustice and alienation intervene in orienting individuals’ paths of identification.