Research has shown that language change is driven on one hand by forces internal to language itself such as grammar-internal systematic pressure, and on the other hand by social motives such as social identity. Language contact presents new features, but why is it that some of them are incorporated as variation and evolving into language change, while others are not? This paper reports a study on a sound change in Shanghainese, a dialect of the Chinese language. Data were collected in natural contexts of conversation followed by a brief interview with informants to gain identity related information about them. It has found that previously negative perception of status attached to a new sound induced by language/dialect contact changed into a positive perception, and people started to identify positively with this new sound. Further, there were differences in various different age and gender groups in taking up the new sound. As a result, this sound has evolved from a nonnative alternative to a systematic variation and it is being established as a sound change. This study has thus further confirmed that social identity plays a pivotal role in driving language features into language variation and language change. (Contains 1 table and 3 figures.)