Previous work has pointed to the anticipated reaction of the perpetrator of a norm violation (i.e, counterpunishment) as a main discouraging factor of third-party punishment. To date, the only experimental study addressing the impact of counterpunishment (Balafoutas et al., 2014) demonstrated that, indeed, the likelihood of third-party punishment decreased under the risk of counterpunishment. However, the underlying mechanisms of counterpunishment remain unclear. The present research examined two non-mutually exclusive accounts. The effect of counterpunishment could be due to a) the additional material costs counterpunishment imposes on third parties (additional cost account), and/or b) the explicit interpersonal conflict counterpunishment entails, and which people might try to avoid (antagonism aversion account). In two studies (Ns = 443, 1662), we experimentally disentangled these two accounts by comparing the decrease in third-party punishment under risk of counterpunishment and under risk of an algorithm imposing an equivalent cost on third-party punishment. Relative to a baseline condition, third-party punishment similarly decreased across the two experimental conditions (Studies 1 and 2). Importantly, this decrease depended on the magnitude of counterpunishment (Study 2). Our results suggest that, despite the social nature of counterpunishment, its effect should be understood as an effect of material costs on third-party punishment.