The roots of the volatile relationships between Japan and China, and Japan and Korea, lie in their changing self-identity and perceived identity of each other. Recently, all three countries have been involved in a process of intense identity construction, which reflects a re-evaluation of their self-identity and the identity of their perceived rivals. They view each other’s efforts to construct a potent national identity as a challenge to their own identity formation. These identity tensions are closely linked to their current political positions and future aspirations. To break out of their “identity dilemma,” China, Japan and Korea need to make a greater effort to construct more positive national identities that are not underpinned by negative collective memory and a victim mentality.