This paper describes the concept of identity formation, examining the historical development of identity, particularly ethnic identity. The author distinguishes the normative developmental achievement of self and group identity with pathological identity diffusion due to an earlier attachment disorder. The clinical case of a young male's experience of his Persian family's immigration to a new host country details the challenges encountered in ethnic identity formation and its interference in consolidating this ongoing process. The complicated task of self identity formation during this phase of development in the face of parental unresolved and ambivalent attitudes toward their own sense of threatened self and group identity diffusion is discussed. Parental intrapsychic conflict combined with environmental conflict such as racism, prejudice, and more recent paranoia toward Middle Eastern immigrant families interferes further with the normal identity formation process. The paper elaborates the compromised bicultural identity of a youngster who struggles through his developmental life phases.