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This study examined age-related differences in behavioral reactions to interpersonal conflict within an iterated prisoner's dilemma (PD). Participants completed an iterated PD game alone and with a partner, either a stranger or a friend who accompanied them to the session. The partner, however, was actually a program that occasionally behaved selfishly or always reciprocated. Afterwards, participants formed trait impressions of their partner's morality and competence. Participants cooperated more with friends than strangers and more with reciprocating partners than selfish ones. Older adults cooperated more with selfish partners and offered more favorable impressions than did younger adults. Overall, perceived partner trait morality was positively associated with cooperative behavior. Relative to younger adults, older adults were more passive during conflict but grew less so as selfishness continued. This passivity co-occurred with more favorable partner impressions and better objective performance, suggesting a degree of calibration not shown by younger adults.