Part of a series designed to help community groups engage in discussion on the possibility of individual and community transformation, this guide explores the issues of stereotyping, prejudice, and discrimination. Characteristics of stereotyping and factors producing prejudice (personality, learned beliefs, frustration, and economic competition) are outlined. Tactics used by prejudice people to rationalize negative/erroneous pre-judgments of people are illustrated. Consequences of prejudice for the victum (loss of self-respect, feelings of humiliation, inferiority, insecurity, disillusionment, unhappiness, helplessness, hopelessness, frustration, fear, and apathy) are discussed. The text is intended to be read aloud by the group facilitator with frequent pauses for discussion. It is accompanied by a brief reading list, activities, and discussion questions to review what has been learned, explore aspects of the discussion more fully, and apply what has been learned to one's own situation and community. (NEC)