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Social comparison can elicit emotions such as envy, which can affect social interactions. The emergence and development of such social emotions through ontogeny, and their influence on social interaction, are unknown. We tested 182 children from 7 to 13 years of age with a novel monetary reward-and-punishment task measuring envy and Schadenfreude (i.e., gloating or taking delight in someone else’s misfortune). Children were either rewarded or punished in a trial-by-trial evaluation of their performance on a speeded reaction time task. In a social condition, feedback of their own and a competitor’s performance was given for each trial. Afterward, children rated how they felt about the outcome. The ratings suggest that when children won, they felt better if the competitor lost instead of winning (i.e., Schadenfreude). Conversely, when children lost, they felt worse if the competitor won instead of losing (i.e., envy). Crucially, levels of envy and Schadenfreude decreased with age. We also studied how these emotions relate to social decisions made separately during three resource allocation paradigms. In each, children chose between two options that differed in the distribution of valuable tokens between themselves and an anonymous other. The combination of choices allowed the measurement of inequity aversion (i.e., equality for all) and spite (i.e., self-profit to maximal disadvantage of the other). We found an age-related increase in inequity aversion and decrease in spite. Crucially, age-related changes in both envy and Schadenfreude predicted the developmental change in equity-related decisions. These findings shed light on the development of social emotions and demonstrate their importance in the development of prosocial behavior in children.