Displaying guilt after a transgression serves to appease the victim and other group members, restore interpersonal relationships, and indicate the transgressors' awareness of and desire to conform to the group's norms. We investigated whether and when young children are sensitive to these functions of guilt displays. In Study 1, after 4- and 5-year-old children watched videos of transgressors either displaying guilt (without explicitly apologizing) or not displaying guilt, 5-year-olds appropriately inferred that the victim would be madder at the unremorseful transgressor and would prefer the remorseful transgressor. They also said that they would prefer to interact with the remorseful transgressor, judged the unremorseful transgressor to be meaner, and, in a distribution of resources task, gave more resources to the remorseful transgressor. The 4-year-olds did not draw any of these inferences and distributed the resources equally. However, Study 2 showed that 4-year-olds were able to draw appropriate inferences about transgressors who explicitly apologized versus those who did not apologize. Thus, 4-year-olds seem to know the appeasement functions that explicit apologies serve but only when children have reached the age of 5 years do they seem to grasp the emotions that apologies stand for, namely, guilt and remorse, and the appeasement functions that displaying these emotions serve.