Third-party punishment can promote fair behavior. However, the mechanisms by which this happens are unclear. Third-party punishment may increase fair behavior by providing "direct feedback," helping shape the behavior of those punished, or through an influence on "reputation," by encouraging the transgressor to behave appropriately before a third-party audience. Investigating whether and how third-party punishment leads to fairness in children during middle childhood--a key developmental period in the emergence of fairness--presents an ideal context in which to explore these 2 mechanisms. Six to nine-year-old children (N = 121) allocated resources between themselves and a partner in a forced-choice dictator game. In the Direct Feedback condition, a third party punished if the child chose the less fair option. In the Reputation condition, a third party merely observed the child. In the Baseline condition, no third party was present. We find that the Direct Feedback condition increased fairness relative to the other conditions, especially among younger children. These results highlight an important link between third-party punishment and fairness in children and, more broadly, help clarify the mechanisms through which third-party punishment can influence fair behavior and thereby human cooperation.