In the article three issues are dealt with: firstly, a description of the traditional social system of Jaffna in so far as it differs from that of South India and the rest of Sri Lanka, secondly, a discussion of the role of the Karaiyars in the past and present contexts, and, thirdly, an illustration of the way this social system is being maintained, albeit in modified form, under conditions of extreme stress and change. In other words it is shown how the frame or structure of the system remains in place while the content changes. This entails the retention of myths, ideals and symbols, while their meaning and also the groups that appropriate these, change dramatically. At the end of the paper it is argued that within the caste-oriented and -dominated social system of Jaffna there lie the seeds for the development of a wider group identity and consciousness which over time develops into nationalism under which caste is subsumed. This happens precisely when the dominant or hegemonic groups change, i.e. when, in our case, instead of the leading group of Vellalars, the Karaiyars appropriate the symbols and ideas of 'Tamilness' and Tamil tradition and modify and extend them horizontally and vertically. A much wider conception of who is a 'Tamil' results. This change evolved over a considerable time span, from the beginning of the 19th to the end of our century, and the Karaiyars took the leading role fairly late in the process. More specifically the connections between the 'caste' system as it exists in Jaffna and the development of the militant struggle are explored to show that part of the difficulties of legitimation the militants still have, stem directly from concepts of caste and caste, or group, conflicts. The consequences of this change of perception and leadership can presently be seen in Jaffna alongside a bloody and increasingly brutal civil war, that is not only directed against the Sinhalese, but also, increasingly, against the suppression and exploitation of the lower castes in Jaffna by the Vellalars.