Gratitude is a positive social emotion that one experiences when one has benefited from another person's goodwill (McCullough, 2002). Feeling gratitude urges the grateful person to reciprocate and respond prosocially, thereby solidifying cooperation. Yet little prior research has focused on the social functions of displaying gratitude, namely to convey that a grateful recipient is likely to be a reliable and trustworthy cooperative partner. The present study examined when in development children become sensitive to these important functions of gratitude displays. The sample consisted of 4-year-old (n = 20; 10 girls) and 5-year-old children (n = 20; 10 girls) from families in the United States that were predominantly White and college educated. Children watched videos of two beneficiaries receiving gifts from a benefactor. One beneficiary showed gratitude, whereas the other was positive but nongrateful. As predicted, 5-year-olds preferred the grateful recipient, thought the benefactor would also prefer her, thought she would be more likely to reciprocate, and distributed more resources to her. The 4-year-olds' responses showed some of the same patterns as those of the 5-year-olds but were less systematic. These findings provide the first evidence that as early as the preschool years, gratitude displays elicit affiliation and cooperation, even among bystanders, and thus serve vital social and cooperative functions.