We examined an account of vicarious shame that explains how people can experience a self-conscious emotion for the behaviour of another person. Two divergent processes have been put forward to explain how another's behaviour links to the self. The group-based emotion account explains vicarious shame in terms of an in-group member threatening one's social identity by behaving shamefully. The empathy account explains vicarious shame in terms of empathic perspective taking; people imagine themselves in another's shameful behaviour. In three studies using autobiographical recall and experimental inductions, we revealed that both processes can explain why vicarious shame arises in different situations, what variation can be observed in the experience of vicarious shame, and how all vicarious shame can be related to a threat to the self. Results are integrated in a functional account of shame.