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Abstract Although stereotypes and prejudice are commonly regarded as conceptually distinct but related constructs, previous research remains silent on the processes underlying their relation. Applying the balance-congruity principle (Greenwald et al., 2002) to the concepts (1) group, (2) valence, and (3) attribute, we argue that the valence of attributes contained in a group-stereotype shapes evaluations of the group, while prejudice towards a group influences which attributes are stereotypically associated with the group. Using fictitious (Experiments 1 and 3) and real (Experiments 2 and 4) groups, the current studies demonstrate that (1) experimentally induced changes in the valence of semantic attributes associated with a group (stereotypes) influence implicit prejudice toward that group (Experiments 1 and 2), and (2) experimentally induced changes in the valence of a group (prejudice) influence implicit stereotyping of that group (Experiments 3 and 4). These findings demonstrate a bidirectional causal relation between prejudice and stereotypes. A compute capsule that produces the analyses in the manuscript is available at Code Ocean (https://codeocean.com/capsule/8574315/).