When an outgroup member's behavior proves harmful for an ingroup member, a member of the victim's group sometimes retaliates against a member of the perpetrator's group. This phenomenon is called intergroup vicarious retribution. The purpose of this study is to examine the effect on intergroup vicarious retribution of being observed by ingroup members (ingroup audience effect). In this study, we allowed the winner of a one-on-one match to impose a fine on the loser in order to manipulate and measure aggression. It was found that participants imposed a bigger fine on an outgroup member when observed by ingroup members than when they were not. Path analysis revealed that being observed by ingroup members has an effect on the fine imposed on the outgroup member through expected admiration from ingroup members and the motivation of retaliation only in the condition of being informed about harm. Being observed by ingroup members enhances the expectations of gaining admiration from ingroup members and intergroup vicarious retribution occurs to a higher degree. The findings of this study suggest that intra-group processes, such as being observed by ingroup members, escalate intergroup conflict.