This study investigated the conditions under which discrimination can lead to social identity changes among members of a minority group. Both positive and negative relations between perceptions of discrimination and social identity have previously been reported. To explain the conflicting results and understand the complex reality of members of stigmatized groups, we argue that group‐based emotions (e.g., group‐based dissatisfaction) and ambiguity of discrimination cues (i.e., overt vs. ambiguous) need to be considered. We hypothesized that perceptions of discrimination would play a moderating role between group‐based dissatisfaction and social identity change in a context of ambiguous, but not of overt, discrimination. The sample was comprised of 151 Arab Muslims living in the province of Quebec. Participants read fictitious newspaper articles portraying either overt ( n  =   76) or ambiguous ( n  =   75) discrimination towards in‐group members. Results revealed that for participants in the overt discrimination condition, only group‐based dissatisfaction was positively associated with social identity change. In contrast, for the participants in the ambiguous discrimination condition, those who perceived little discrimination and felt low group‐based dissatisfaction reported a decrease in social identity. However, those who perceived low group discrimination and felt high group‐based dissatisfaction reported a positive social identity change.