The present article offers a conceptual model for how the cognitive processes associated with perspective-taking facilitate social coordination and foster social bonds. We suggest that the benefits of perspective-taking accrue through an increased self-other overlap in cognitive representations and discuss the implications of this perspective-taking induced self-other overlap for stereotyping and prejudice. Whereas perspective-taking decreases stereotyping of others (through application of the self to the other), it increases stereotypicality of one's own behavior (through inclusion of the other in the self). To promote social bonds, perspective-takers utilize information, including stereotypes, to coordinate their behavior with others. The discussion focuses on the implications, both positive and negative, of this self-other overlap for social relationships and discusses how conceptualizing perspective-taking, as geared toward supporting specific social bonds, provides a framework for understanding why the effects of perspective-taking are typically target-specific and do not activate a general helping mind-set. Through its attempts to secure social bonds, perspective-taking can be an engine of social harmony, but can also reveal a dark side, one full of ironic consequences.