Diversity is a defining characteristic of modern society, yet there remains considerable debate over the benefits that it brings. The authors argue that positive psychological and behavioral outcomes will be observed only when social and cultural diversity is experienced in a way that challenges stereotypical expectations and that when this precondition is met, the experience has cognitive consequences that resonate across multiple domains. A model, rooted in social categorization theory and research, outlines the preconditions and processes through which people cognitively adapt to the experience of social and cultural diversity and the resulting cross-domain benefits that this brings. Evidence is drawn from a range of literatures to support this model, including work on biculturalism, minority influence, cognitive development, stereotype threat, work group productivity, creativity, and political ideology. The authors bring together a range of differing diversity experiences and explicitly draw parallels between programs of research that have focused on both perceiving others who are multicultural and being multicultural oneself. The findings from this integrative review suggest that experiencing diversity that challenges expectations may not only encourage greater tolerance but also have benefits beyond intergroup relations to varied aspects of psychological functioning. (Contains 1 figure and 1 footnote.)