Institutional identity is probably seen as the best and the only effective way for dealing with the uncertainties of postmodern society. The theory of institutional identity as positive interaction and development of personal and social identities and the foundation of self-image and self-esteem is especially important in the context of military organization. Defining or redefining the identity and its role in contemporary society has become the priority for the scientist. Mutable character of postmodern identity and identities’ diversity put to inconvenience the traditional understanding of this phenomenon. The phenomenon of postmodern identity has brought some difficulties into creation of universal concept of institutional identity. Institutional identity of the Armed Forces is reasoned by the postmodern transformations of the society. Transformations in the Armed Forces (changes in mission, structure, woman’s role, etc.) have shifted traditional identity of the militaries toward contemporary society: i.e. it has become multidimensional and fragmented. The process of creation of institutional identity in the Armed Forces should be based on peculiarities of postmodern individuals: rational way of thinking and their self-esteem.