Parental limit setting is a challenging and common situation in the daily lives of young children. During these situations, older siblings may use their more advanced cognitive skills and their greater physical strength to discipline their younger sibling and prevent or correct noncompliant behavior. This is the first study to examine preschoolers' discipline towards their toddler siblings during parental limit setting. In addition to observing preschoolers' sibling discipline, associations with their inhibitory control and externalizing behavior, their sibling's noncompliance and both children's gender were investigated. Sibling discipline was observed during parental limit setting in 285 families during one home visit with the mother and one home visit with the father. Preschoolers did discipline their younger siblings without being asked in the majority of the families, with girls displaying more disciplining behavior than boys. Toddlers' noncompliance was related to increased sibling discipline when their older siblings showed high levels of externalizing behavior themselves, although no such relation was found in case of older siblings with low levels of externalizing behavior. Sibling discipline was not related to preschoolers' inhibitory control or toddler's gender. Sibling discipline might thus be an expression of power assertion of the older sibling, instead of the moral urge to prevent transgressions. Highlights Preschoolers' discipline towards their toddler siblings was examined during parental limit setting, as well as associations with characteristics of both children. Observed discipline towards a younger sibling was related to externalizing behavior and not to inhibitory control of the older sibling. Sibling discipline seems to be an expression of older siblings' power assertion, instead of a moral urge to prevent transgressions.