People in advanced old age with frailties and those who are resident in old-age institutions manage their identities within the constraints of stigmatised settings. This paper compares the processes of identity construction in an old-age home and in a sheltered housing project for older people in Israel. Applying a symbolic-interactionist perspective that sees old-age institutions as social arenas for the reconstruction of identity, the paper first distinguishes the residents' constructions of stigma and deviance. While the old-age home residents collectively turned their stigma into a source of positive labelling, the sheltered housing residents drew advantages from their previous roles and statuses. Gossip is shown to play a critical role in reproducing stigma, particularly in the old-age home. These findings are used to demonstrate the variability and potential for adaptation among the residents – who are often stereotyped as homogeneous and passive. The paper concludes with a discussion of the literal and metaphorical languages used by older people, and of stigma as a positive instrument that can introduce content into the definition of the self.