Cooperation is a fundamental drive of moral behavior from infancy, yet competitive intergroup contexts can exert a significant influence on resource allocation behavior in childhood. The present study explored how ingroup and outgroup norms of competition and cooperation influenced the allocation of resources between groups among children and adolescents, along with how they reasoned about these allocations. Ingroup norms combined, for the first time, with outgroup norms were manipulated to examine their effect on the development of intergroup resource allocation. Participants aged 8 to 16 years (n = 229) were told that their ingroup and the outgroup held either a competitive or cooperative norm about how they should behave in an arts competition. They then allocated tokens for expenditure in the competition between the 2 teams, and provided social reasoning to justify their chosen allocations. Results showed a negative outgroup norm of competition led to significantly more ingroup bias when the ingroup also held a competitive rather than a cooperative norm. In contrast, a positive outgroup norm of cooperation did not result in significantly less ingroup bias when the ingroup also held a cooperative norm. Additionally, adolescents, unlike children who allocated equally were more likely to make reference to fair competition, a form of moral reasoning, in the competitive compared with the cooperative ingroup norm condition. This study showed that children and adolescents considered both ingroup and outgroup norms simultaneously when making intergroup resource allocations, but that only adolescents varied their reasoning to justify these allocation in line with group norms.