This study examined the effects of negative group stereotypes on adolescents' reasoning about peer retribution. The sample of adolescents was drawn from central and northern Israel and consisted of 2,604 Arab and Jewish students (ages 13-17; grades 7-11). A quasi-experimental, between-subject design was used, in which the students in each grade were assigned randomly to 1 of 4 peer retribution scenarios. The findings provide evidence that Arab and Jewish students have stereotypes about one another and that in-group bias affected their approval and reasoning about peer retribution only in specific situations. This inquiry provides evidence that it was the number of justifications endorsed within a specific domain that distinguished Arab and Jewish respondents. Theoretical and practical implications are discussed.