One of his main concerns throughout his work is providing a liberal framework for the just treatment of minority groups, which he divides into two basic categories: polyethnic or immigrant groups, and national minorities (such as the Canadian Québécois, or the M?ori of New Zealand). He lists criteria for national minorities or "minority nations":

1. present at founding;
2. prior history of self-government;
3. common culture;
4. common language;
5. governing selves through institutions.

By these criteria, the two "minority nations" in Canada are the First Nations population and the Québécois. Kymlicka argues that such minority groups deserve unique rights from the state by the nature of their unique role and history within the national population. Polyethnic groups, however, are less deserving of such rights, since they come to the state voluntarily and thus have some degree of responsibility to integrate to the norms of their new nation. At the same time, Kymlicka acknowledges the problems faced by refugees, whether from conflict or poverty, and by such minority groups such as African-Americans (whose heritage in America clearly did not begin voluntarily).

In Multicultural Citizenship (1995), Kymlicka argues that group-specific rights are consistent with liberalism, and are particularly appropriate, if not outright demanded, in certain situations. He defines three such group-specific rights: special group representation rights (such as affirmative action policies in politics); self-government rights; and polyethnic rights (such as the policy exempting Sikhs from having to wear motorcycle helmets).

A distinction that Kymlicka draws, which is crucial to his liberal defence of group-specific rights for minorities, is between external protection and internal restrictions. Kymlicka argues that external protections between groups may be justified in order to promote equality (though they must not allow for oppression or exploitation, as in apartheid in South Africa). Internal restrictions, however, cannot be justified from a liberal perspective, insofar as they restrict a person's autonomy, though they may be granted in certain cases to national minorities.

The standard liberal criticism which states that group rights are problematic because they often treat individuals as mere carriers of group identities rather than autonomous social agents is overstated or oversimplified. The actual problem of minorities and how they should be viewed in liberal democracies is much more complex. There is a distinction between good group rights, bad group rights, and intolerable group rights.

1. Bad Group Rights (internal restrictions) are rules imposed by the group upon intra-group relations. Most often take the form of the group restricting the liberty of individual members in the name of group solidarity. Indigenous groups try to protect themselves from women's movements on the basis that they threaten the social and traditional role of indigenous populations. He contends this raises the danger of individual oppression. Internal restrictions can be used to uphold violent, dominant, absolutist systems. Legally imposed internal restrictions are thus bad and almost always unjust. Not to mention they go against liberal ideals.
2. Good Group Rights (external protections) involve inter-group relations. Indigenous groups need protection in terms of their nationals identities by limiting the vulnerability of that group to the decisions of external groups or society. Therefore, they should have the right to their own taxation, health care, education, and governance.

• In 2004, Kymlicka was awarded the Killam Prize by the Canada Council for the Arts

• Multicultural Citizenship was awarded the Macpherson Prize by the Canadian Political Science Association, and the Ralph Bunche Award by the American Political Science Association

• He is a Fellow of the Royal Society of Canada, and of the Canadian Institute for Advanced Research.

• From 2004-6, he was the President of the American Society for Political and Legal Philosophy.