The widespread prevalence in the utilization of groups across different aspects of our society including social settings, workplaces, and educational settings has long piqued researchers' interests in understanding the psychological processes involved in groups. One particularly interesting psychological phenomenon that occurs within a group setting is the formation of perceptions of group diversity and the impacts that these perceptions have on the attitudes and behaviors of group members. Despite the theoretical rationale for the importance of perceptions of diversity that is provided by intergroup contact theory and individuation research, work group diversity research has been limited in empirically examining the impacts that perceived diversity on group functioning and performance. This study takes the first step in this direction by conceptually and empirically defining perceived diversity and examining the effects of actual diversity and perceived diversity on group functioning and performance. Findings of this research provide empirical evidence to support the inclusion of perceived diversity in work group diversity research as a distinct construct that has impacts on group functioning and performance.