Often, research on social categorization focuses on its downstream negative consequences: stereotyping, prejudice, and discrimination. But, forming conceptually-rich social categories also has benefits, such as helping people to navigate the complex social world by allowing them to reason about the likely thoughts, beliefs, actions, and interactions of others, as guided by group membership. Here, Liberman provides evidence that the foundation of the human ability to form useful social categories is in place in infancy: social categories guide the inferences infants make about people's similarity and about their social relationships. Liberman ends by discussing potential flexibility in early social categorization based on the experience of growing up in a diverse society. Although a tendency to form inductively-rich social categories appears early in ontogeny, prejudice based on any particular dimension of categorization may not be inevitable.