This article discusses the concept "inculturation" from both a critical and constructive perspective. It is concerned with the ideas about "culture" and cultural or ethnic identity that underlie the discourse and practice of inculturation. While inculturation is an important hermeneutical and theological principle it is necessary to be critical of the way in which theologians sometimes employ these notions, in particular in situations of ethnic conflict. The article juxtaposes essentialist and static assumptions about ethnic identity and culture underlying projects of inculturation in Sri Lanka with theoretical, postcolonial perspectives on such identities as "negotiated" or "constructed" in an ongoing cultural process. It considers the possible implications of such a perspective for the practices of inculturation in Sri Lanka, as well as the consequences for the theoretical understanding of the concept inculturation itself. The article criticizes the understanding of cultural or ethnic identity as the foundation of theological inculturation, and raises the question what does constitute such a basis. It argues, first, for an emphasis on the theological basis of inculturation in God's incarnation and saving presence in human cultures. Second, difference of culture rather than cultural identity should constitute the basis for the local construction of theology. Third, it argues that claims for theological difference are always voiced within, and therefore already presuppose, ecumenical or catholic relationships and structures of communication. The article concludes by arguing, on the basis of a "globalized" and postcolonial concept of culture, for an understanding of inculturation that includes other than cultural or ethnic identities as part of its concern with culture, as well as socioeconomic and political processes. It is hoped that a revision of the concept of inculturation along these lines may be more helpful in situations of ethnic conflict, and may also help to bring a convergence between the understanding of inculturation and contextualization.