Moral observer-licensing happens when people condone others’ morally questionable conducts due to their history of moral behaviors. We investigated in four studies (N = 808) this phenomenon in the context of cyberspace and its contributing factors and boundary conditions. Study 1 determined what participants perceived as typically moral and immoral behaviors in cyberspace. Then in Study 2, participants condemned less a story character’s online immoral behavior when they were informed of the character’s prior online moral behavior than when they were not, which indicates moral observer-licensing in cyberspace. Study 3 confirmed the presence of moral observer-licensing in cyberspace and further demonstrated that a character’s prior moral or immoral behavior online respectively reduces or intensifies the negativity of the character’s subsequent immoral behavior. Finally, Study 4 showed that participants who identified with the victim in a hypothetical scenario showed less forgiveness and more condemnation of a character’s immoral behavior than those who identified with the perpetrator or the bystander. These findings are of theoretical and practical significance for our understanding of cyber ethics.