In this study, we investigate the relationship between social preferences (material preference and group preference) and indirect reciprocity and the role of empathy in 3-5-year-old children in China. The first study involved 94 children and aimed to investigate the relationship between social preferences and indirect reciprocity and the moderating effect of empathy on the aforementioned relationship. In Study 2, 128 children were selected to examine the effect of empathy induction on indirect reciprocity. Our results indicated that preschool children showed certain social preferences and paid forward both positive and negative outcomes to others. However, these social preferences would not jointly affect children's indirect reciprocity. Cognitive empathy could moderate the relationship between social preferences and children's positive indirect reciprocity. Additionally, empathy induction could promote the positive indirect reciprocity and inhibit the negative indirect reciprocity.