Informed by social identity theory and a rhetorical approach to the study of social category construction in social interaction, this study analyzed the nature and function of participant utterances in two conditions of intergroup dialogue about history between Israelis and Palestinians. Across conditions that sought to either emphasize recategorization into a common in‐group identity or subcategorization into mutually differentiated identities, Palestinian and Arab Israeli utterances primarily reflected the theme of victimization, while Jewish Israeli utterances primarily reflected themes of justification and victimization. The way in which these utterances produced social competition for victim and perpetrator roles and reproduced master historical narratives of Palestinian victimization versus Jewish Israeli “righteous” victimization is illustrated. Findings are discussed in terms of the role of narrative and rhetoric about social categories in settings of intractable political conflict, and implications for dialogue‐based intervention about history are addressed.