A minimal group study examined the effect of peer group rejection on children's state anxiety and self-esteem, as well as their attitudes towards the rejecting group and an outgroup that had the same or different ethnicity to the participants. Seven and 9-year old Anglo-Australian children (N = 104) were randomly assigned to an Anglo-Australian team for an intergroup drawing competition. The competitor team had children with the same (i.e., Anglo-Australian) or different (i.e., Pacific Islander) ethnicity as their own team. The children then role-played that they had been accepted or rejected by their team members. Children's subsequent ratings indicated that peer group rejection caused a decrease in self-esteem and an increase in anxiety, dislike for the rejecting ingroup, but greater liking for the outgroup, regardless of its ethnicity. Results also indicated that, regardless of peer status, children expressed greater liking for the ingroup when there was a different versus same ethnicity outgroup, and greater liking for the same versus different ethnicity outgroup. The implications of the findings for peer group rejection research are discussed.