Social groups aid human beings in several ways, ranging from the fulfillment of complex social and personal needs to the promotion of survival. Despite the importance of group affiliation to humans, there remains considerable variation in group preferences across development. In the current study, children and adolescents completed an explicit evaluation task of ingroup and out-group members during functional neuroimaging. We found that participants displayed age-related increases in bilateral amygdala, fusiformgyrus and orbitofrontal cortex (OFC) activation when viewing in-group relative to out-group faces. Moreover, we found an indirect effect of age on in-group favoritism via brain activation in the amygdala, fusiform and OFC. Finally, with age, youth showed greater functional coupling between the amygdala and several neural regions when viewing in-group relative to out-group peers, suggesting a role of the amygdala in directing attention to motivationally relevant cues. Our findings suggest that the motivational significance and processing of group membership undergoes important changes across development.