Research has typically portrayed downward performance spirals as inevitable following initial failure experiences. On the basis of social identity theorizing, we provide a prescription for reversing these spirals. In two experiments, we manipulated the source of failure feedback between successive trials on a task. Participants in each experiment initially performed the task better in the presence of an ingroup versus an outgroup member. Subsequently, performance worsened only after discouraging feedback from an ingroup member, and improved only after encouraging feedback from an ingroup member. Experiment 2 showed that motivation mediated these effects: Those who became motivated to prove the outgroup wrong and the ingroup right were most likely to recover from earlier poor performance. Therefore, downward performance spirals are not inevitable; they can be reversed by harnessing the uniquely potent combination of ingroup influence and intergroup competition.