One of the current trends in social psychological literature locates the roots of prejudice in an individual's social identity or, more specifically, in the identification of a person with a particular social sphere to the exclusion of groups outside it. This paper identifies concepts parallel to this trend in the traditional school of Indian thought called Vedānta. Attempt is made to show that the Vedāntic methods, which are primarily aimed at self-realization, help an individual in transcending the ego's exclusive identification with a limited social sphere and its ideologies. It is pointed out that Vedāntic methods incidentally help rid oneself of all social prejudices. The limitations of such an approach to prejudice reduction are discussed.