The article explores the interactional relationship between ethnic identity, immigration, and psychological well-being, emphasizing that these factors are interconnected and influenced by both individual and societal contexts. It proposes an interactional model where the psychological outcomes of immigration depend on the attitudes and characteristics of immigrants and the responses of the receiving society. Ethnic and national identities are key components of this model, with their interplay affecting adaptation and well-being. The article reviews existing theories and research on ethnic identity and acculturation, highlighting that acculturation is a two-dimensional process involving the preservation of one's heritage culture and adaptation to the host society. Four acculturation strategies—integration, assimilation, separation, and marginalization—are derived from responses to these two dimensions. The study of immigrant adolescents in four countries (United States, Israel, Finland, and the Netherlands) supports the interactional model, showing that integrated identities, combining strong ethnic and national identities, are most associated with positive psychological outcomes. The article also discusses the role of immigrant policies in shaping identity and adaptation, noting that policies supporting multiculturalism can facilitate bicultural identities. It further examines the relationship between ethnic identity and school adjustment, finding that bicultural orientations are generally conducive to better academic performance. The study also highlights the importance of considering factors such as gender, age, and generation in understanding identity and adaptation. Overall, the research underscores the complexity of the interaction between ethnic identity, immigration, and adaptation, emphasizing the need for policies that support cultural retention and integration. The findings suggest that a balanced approach, allowing for both cultural preservation and adaptation, is essential for the well-being of immigrants.The article explores the interactional relationship between ethnic identity, immigration, and psychological well-being, emphasizing that these factors are interconnected and influenced by both individual and societal contexts. It proposes an interactional model where the psychological outcomes of immigration depend on the attitudes and characteristics of immigrants and the responses of the receiving society. Ethnic and national identities are key components of this model, with their interplay affecting adaptation and well-being. The article reviews existing theories and research on ethnic identity and acculturation, highlighting that acculturation is a two-dimensional process involving the preservation of one's heritage culture and adaptation to the host society. Four acculturation strategies—integration, assimilation, separation, and marginalization—are derived from responses to these two dimensions. The study of immigrant adolescents in four countries (United States, Israel, Finland, and the Netherlands) supports the interactional model, showing that integrated identities, combining strong ethnic and national identities, are most associated with positive psychological outcomes. The article also discusses the role of immigrant policies in shaping identity and adaptation, noting that policies supporting multiculturalism can facilitate bicultural identities. It further examines the relationship between ethnic identity and school adjustment, finding that bicultural orientations are generally conducive to better academic performance. The study also highlights the importance of considering factors such as gender, age, and generation in understanding identity and adaptation. Overall, the research underscores the complexity of the interaction between ethnic identity, immigration, and adaptation, emphasizing the need for policies that support cultural retention and integration. The findings suggest that a balanced approach, allowing for both cultural preservation and adaptation, is essential for the well-being of immigrants.