Two processes describe racially ambiguous Black/White Biracial categorization—the one-drop rule, or hypodescent, whereby racially ambiguous people are categorized as members of their socially subordinated racial group (i.e., Black/White Biracial faces categorized as Black) and the ingroup overexclusion effect, whereby racially ambiguous people are categorized as members of a salient outgroup, regardless of the group’s status. Without developmental research with racially diverse samples, it is unclear when these categorization patterns emerge. Study 1 included White, Black, and racially diverse Biracial children (aged 3- to 7-years) and their parents to test how racial group membership and social context influence face categorization biases. To provide the clearest test of hypodescent and ingroup overexclusion, White participants came from majority White neighborhoods and Black participants from majority Black neighborhoods (with Biracial participants from more racially diverse neighborhoods)—two samples with prominent racial ingroups. Study 2 aimed to replicate the parent findings with a separate sample of White, Black, Black/White Biracial, and Asian adults. Results suggest the ingroup overexclusion effect is present across populations early in development and persists into adulthood. Additionally, categorization was meaningfully related to parental context, pinpointing a pathway that potentially contributes to ingroup overexclusion.