This study explores how everyday interactions in institutional care settings shape identity formation and social inclusion among marginalised youth. Based on ethnographic data, including interviews, observations, and institutional documents from Swedish special youth homes, the analysis combines social pedagogical, interactionist, ethnomethodological, and intersectional perspectives. Narratives from unaccompanied refugees and young people with drug- and crime-related challenges reveal how experiences of trauma, stigmatisation, and contested professional roles intersect to influence self-representation and integration. While some institutional actors offer crucial support, others contribute to exclusion through power-laden practices. A multi-level analysis highlights how explicit conflicts and underlying dynamics shape professional roles and future outcomes. These findings underscore the need for empathetic, inclusive collaboration and contribute to a research-oriented social pedagogy that accounts for identity, power, and cultural context.