College students' achievement of diversity-related learning outcomes is primarily facilitated by intercultural peer interactions. Close friendships across cultural differences are especially powerful, yet we know little about how or why these relationships develop and are sustained. The purpose of this study was to understand how college students develop and sustain interracial friendships, as one form of intercultural friendship, by developing a grounded theory of this process. Twenty-one undergraduate students who had a close friend of another race or ethnicity participated. Data were obtained via interviews, journals, and written questionnaires. The resulting theory of interpersonalizing cultural difference consists of four central subprocesses in which college students engage in developing and sustaining their interracial friendships: (1) cultivating trust and establishing a silent contract, (2) embracing similarity without forgetting difference, (3) exploring other cultures, and (4) bridging difference to connect. This research provides insight into how colleges and universities can support interracial friendships to more effectively facilitate students' achievement of diversity-related learning outcomes. Specific implications address the types of campus environments that facilitate interracial friendship development and the need for interventions to ensure that students from all cultural backgrounds have the support they need to positively and meaningfully engage with culturally different peers.