The vast presence of populism in contemporary political discourse has introduced a narrative steeped in nostalgia, evoking images of a revered national past and delineating a stark division between the ‘authentic us’ and the ‘alien them’. While these messages resonate with a substantial portion of citizens, they concurrently foster identity-driven animosity and derogation. In a pre-registered experiment in the Netherlands (with data collected between January and March 2023), we distinguish the influence of nostalgic narratives and scapegoating on societal sentiments, revealing their pivotal role in exacerbating current levels of polarization. Our findings underscore the potential of nostalgic narratives to shape affective sentiments towards ideological and social in-groups, while also influencing sentiments towards out-groups. Messages featuring scapegoats were found to intensify positive sentiment towards in-groups, while simultaneously diminishing positive sentiment towards out-groups. This research underscores a crucial mechanism underpinning the ebb and flow of identity-based sentiments. The results indicate that nostalgic discourse, particularly when intertwined with scapegoating, can serve as a catalyst for the intensification of in-group affinity and the exacerbation of out-group aversion. In essence, our study underscores the far-reaching implications of nostalgic narratives in perpetuating societal animosity and polarization and sheds light on a critical facet of contemporary political discourse.