Dominant discourses in Germany portray children with a so-called "migration background" implicitly or explicitly as "the Other" in relation to a normative image of "German children." Family origins, language, and physical appearance act as important criteria in this process of ethnifying children. Embedded within this discursive framework, my research focus, however, is on the perspectives of the children themselves and how they participate in the social construction of ethnic identities. The paper is based on an ethnographic research in a day care center in Berlin with children from four to six years of age. Participant observation and symbolic group interviews were employed to explore the children's practical enactment and use of ethnifying identity ascriptions in the context of the peer culture. I argue that ethnicity is not a pregiven fact, but practically accomplished and negotiated in children's social interactions. Thus, the research contributes to our understanding of children's agency and competence as well as of the relationality, provisionality, and context-dependence of children's identity constructions.