Tribal villages are usually perceived to be the egalitarian counterparts to villages in India that are ruled by hierarchical caste structures. Taking the case of Ao Naga villages, clan rank and class are found to be important for understanding the changing structures of inequality. Today, these villages are deeply integrated into the larger milieus: politics, administration, education and the market economy. The social mechanisms responsible for inequality are now to a large degree centred outside the village, and living in a village has become almost identical with a lower social status. One result of this process is that instead of clan ranks, the access to outside resources forms the basis of social inequality within the village. Based on secondary sources as well as original fieldwork, an account of how this integration leads to class differentiations at the village level is presented.