Two studies tested whether racial category labels and lay beliefs about human traits have a combined effect on people’s perception of, and memory for, racially ambiguous faces. Participants saw a morphed target face accompanied by a racial label (Black or White). Later, they were asked to identify the face from a set of two new morphed faces, one more Black and the other more White than the target. As predicted, entity theorists, who believe traits are immutable, perceived and remembered the target face as consistent with the racial label, whereas incremental theorists, who believe traits are malleable, perceived and remembered the face as inconsistent with the racial label. In Study 2, participants also drew the target face more consistently (entity theorists) or less consistently (incremental theorists) with the racial label. Results of both studies confirm that social variables can affect how physical features are seen and remembered.