Purpose The goal of our study was to scrutinize the psychological processes that occur in individuals when developing identification with a highly diverse team. Design/Methodology/Approach A qualitative, theory-generating approach following the principles of grounded theory was chosen as research design. Data were obtained from 63 personal interviews with members of seven UN peacebuilding teams in Liberia and Haiti. These teams were particularly well suited for analyzing the dynamics of identification processes as they constitute extreme cases with respect to team members' identity diversity. Findings Our analysis reveals four different processes that occur as individuals develop team identification (TI): enacting a salient identity, sensemaking about team experience, evaluating collective team outcomes, and converging identity. Implications We can show that team members engage in both individual-and collective-directed sensemaking processes during TI development, thereby using internal (i.e., other team members) and external points of reference (i.e., team-external actors) for ingroup/outgroup comparisons. Moreover, our study reveals different modes of identity convergence (i.e., active, reactive, and withdrawal) which are associated with different types of TI (i.e., deep-structured TI, situated TI, and disidentification). Originality/Value Although team members' identification with their workgroup has long been considered important for effective team functioning, knowledge about its development has remained limited and largely without empirical footing from a real-world team context. Our study represents the first empirical attempt to inductively identify the processes that occur in individuals as they develop TI.