Creating institutions that effectively manage interstate conflict is a priority for policy-makers. In this article we demonstrate that military allies are well positioned to influence the crisis-bargaining behavior of both challengers and targets in ways that often lead to peace. Through a three-player game-theoretic model, we demonstrate that a target's alliances not only have an effect on the demand that the challenger makes, but also on the behavior of the target. When a target values an alliance highly, an ally's recommendation for settlement can encourage the target to concede to demands without further escalation. Our statistical analysis provides evidence in support of the theoretical finding. Allies can both deter challengers and restrain partners, and as a result, can encourage peaceful behavior not only from adversaries, but from member states as well. Our study thus sheds new light on the role of military alliances as potential conflict management devices.