Abstract When are we more likely to permit immoral behaviours? The current research examined a generalized compensation belief hypothesis that individuals, as observers, would morally tolerate and accept someone paying forward unfair treatment to an innocent person as a means to compensate for the perpetrator's previously experienced mistreatment. Across five experiments ( N = 1107) based on economic games (Studies 1–4) and diverse real‐life scenarios (Study 5), we showed that participants, as observing third parties, were more likely to morally permit and engage in the same negative act once they knew about previous maltreatment of the perpetrator. This belief occurred even when the content of received and paid‐forward maltreatment was non‐identical (Study 2), when the negative treatment was received from a non‐human target (Study 3) and when the maltreatment was intangible (e.g. material loss) or relational (e.g. social exclusion; Study 5). Perceived required compensation mediated the effect of previous maltreatment on moral permission (Studies 4 and 5). The results consistently suggest that people's moral permission of immoral behaviours is influenced by perpetrator's previous mistreatment, contributing to a better understanding of the nature and nuances of our sense of fairness and contextualized moral judgement.