A shift in a country’s political cleavage structure from class to culture precedes many cases of democratic backsliding. Political entrepreneurs advertently engineer these shifts. How and when do political entrepreneurs manage to reshape entire cleavage structures and to make salient new identities? We develop a formal model of endogenous identity politics in which voters form beliefs about their ingroup and outgroup stereotypes before making an electoral choice between a normal and an authoritarian candidate. We show that political entrepreneurs push outgroup stereotypes among ingroup members rather than reshaping ingroup stereotypes. Shifts occur if political entrepreneurs from opposing camps seek to amplify extreme beliefs about their respective outgroups. If elected, the authoritarian candidate exploits this polarized environment to undermine democracy. Our insights improve our understanding of identity politics, voter realignments, and democratic backsliding.