The demographic changes occurring in most countries poses an urgent challenge for many organizations. Companies are confronted with the fact that their workforce is getting older and younger employees are being recruited hence creating an age diverse labour force. These changes imply that companies which have historically had a largely homogenous older workforce, have to integrate an increasing number of younger employees which in turn creates an increasingly age-diverse labour force. Therefore, the pressing question for practitioners in these organizations concerns the effects of the age-diverse workforce on the firm’s overall performance and which organizational intervention strategies mayinfluence it. This paper seeks to advance the diversity literature by investigating the role of age diversity in organizational performance. Drawing from similarity attraction, social-identity, social categorization and human capital theories, the paper theoretically advance an argument that, in age-diverse firms, age-based sub grouping processes occur, favoring a shared perception of a negative age-discrimination climate. This perceived negative agediscrimination climate in turn negatively relates to organizational performance. Diversity-friendly Human Resource policies are potential organizational intervention strategies that can prevent the negative relations of age diverse workforce and its impact on organizational performance.