Research on entrepreneurship has burgeoned in recent years. However, our understanding of how people identify opportunities – a critical first step in the entrepreneurial process – remains relatively limited. In this talk I will discuss my dissertation, which develops a model of opportunity identification based on the concept of distinction-making. Distinction-making refers to the process of creating and refining new cognitive categories, and I argue that this is a key mechanism that facilitates the identification of new opportunities in two ways. First, distinction-making aids the generation of ideas for new and potentially valuable technologies. Second, distinction-making engenders more fine-grained perceptions of potential markets in which those technologies can be applied. As a result of these two processes, I argue that distinction-making enables people to identify “fit” between technologies and markets, a hallmark of opportunity identification. I test these predictions using a two study multi-method design including qualitative interviews with nascent entrepreneurs and controlled laboratory experiments.