This article considers the emergence and evolution of punitive and compensatory remedies in ancient law. I describe how ancient practices of retaliation gradually evolved, through four general phases, into rules requiring victim's compensation. I suggest that the Biblical lex talionis ("eye for an eye . . . life for a life") and similar rules that emerged in other ancient legal systems triggered an important change in the ancient law of wrongs, marking the end of a system of retaliatory justice and the emergence of a system based on victim's compensation. The paper addresses four related questions. (1) Why was a single limit of 1:1 to talionic penalties introduced across all categories of wrongdoing, replacing older customary practices that had different multipliers according to the circumstances of the case? (2) In the presence of imperfect enforcement, did the 1:1 limit to retaliation result in underdeterrence? (3) Why did the practices of literal talionis rapidly fall into disuse after written formalization? (4) Were the kofer and blood-money payments made under a threat of literal retaliation likely to generate overextraction from the wrongdoer and excessive deterrence?