Aggressive interactions between groups are frequent in human societies and can bear significant fitness costs and benefits (e.g. death or access to resources). During between-group competitive interactions, more cohesive groups (i.e. groups formed by individuals who cooperate in group defence) should out-perform less cohesive groups, other factors being equal (e.g. group size). The cost/benefit of between-group competition are thought to have driven correlated evolution of traits that favour between-group aggression and within-group cooperation (e.g. parochial altruism). Our aim was to analyse whether the proximate relationship between between-group competition and within-group cooperation is found in 3-10 years old children and the developmental trajectory of such a relationship. We used a large cohort of children (n = 120) and tested whether simulated between-group competition increased within-group cooperation (i.e. how much of a resource children were giving to their group companions) in two experiments. We found greater within-group cooperation when groups of four children were competing with other groups then in the control condition (no between-group competition). Within-group cooperation increased with age. Our study suggests that parochial altruism and in-group/out-group biases emerge early during the course of human development.