Although human beings are expected to be sympathetic when seeing others suffer and happy when seeing others gain, some research has found the opposite. Based on the zero-sum framework (Von Neumann & Morgenstern, 1944) and appraisal theory (Lazarus, 1991b; Lazarus & Smith, 1988), this study examines how contextual and individual factors intensify or mitigate observers’ malicious reactions towards colleagues’ experience. Using a 2 (competition vs. non-competition) × 2 (abusive supervision vs. respectful supervision) between-subject design, we examines the roles of competition at work and individuals’ self-esteem in observers’ malicious reactions (i.e., schadenfreude, envy, and derogation) to observed (in)justice (i.e., abusive/respectful supervision). 316 employees from the United States participated in the experiment. Results demonstrated that competition at work promotes schadenfreude, envy and explicit derogation to observed (in)justice, and self-esteem has both functional and dysfunctional effects. This study suggests that competition at work as a critical contextual factor and observer self-esteem as an important individual difference that impact malicious reactions to observed (in)justice under competition.