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Description: Humans form social coalitions in every society, yet we know little about how we learn and represent social group boundaries. Here we derive predictions from a computational model of latent structure learning to move beyond explicit category labels and interpersonal, or dyadic similarity as the sole inputs to social group representations. Using a model-based analysis of functional neuroimaging data, we find that separate areas correlate with dyadic similarity and latent structure learning. Trial-by-trial estimates of ‘allyship’ based on dyadic similarity between participants and each agent recruited medial prefrontal cortex/pregenual anterior cingulate (pgACC). Latent social group structure-based allyship estimates, in contrast, recruited right anterior insula (rAI). Variability in the brain signal from rAI improved prediction of variability in ally-choice behavior, whereas variability from the pgACC did not. These results provide novel insights into the psychological and neural mechanisms by which people learn to distinguish “us” from “them.”