Abstract: This paper explores the development of ingroup favoritism and outgroup bias among Han, Yi, and Mosuo children in Yunnan, China. Through an incentivized lab-in-the-field experiment, we assess children’s levels of outgroup bias using a modified dictator game. Our findings reveal a pronounced outgroup bias, particularly against Yi children, with Mosuo and Han children showing higher levels of prejudice. Notably, this bias mirrors the deep-seated prejudice observed among Mosuo and Han adults toward the Yi. The bias exhibited by children is not accounted for by socioeconomic differences between the Mosuo/Han and Yi groups. Additionally, we find that having a more educated mother is associated with less prejudiced attitudes in children. While contact with other ethnic groups reduces biases among Mosuo and Han girls, Mosuo and Han boys display stronger biases in classes with a higher proportion of Yi students.