This study explores the micro-dynamics of the interrelationship between organizational identity as cognition and as embedded in organizational practice. Building on detailed data on actions and interactions from a longitudinal case study, we find that, even when existing identity essentially constrains daily (inter-) actions, a significant change potential is inherent in the daily micro-processes in which the existing identity is (re)produced. Based on this, we propose a grounded model that highlights a number of important, yet previously unexplored, mechanisms and conditions that contribute to explain emergent organizational identity change processes.