Anthropologists have long argued that fear of victimization through witchcraft accusations promotes cooperation in small-scale societies. Others have argued that witchcraft beliefs undermine trust and therefore reduce social cohesion. However, there are very few, if any, quantified empirical examples demonstrating how witchcraft labels can structure cooperation in real human communities. Here we show a case from a farming community in China where people labelled zhu were thought capable of supernatural activity, particularly poisoning food. The label was usually applied to adult women heads of household and often inherited down the female line. We found that those in zhuhouseholds were less likely to give or receive gifts or farm help to or from non-zhu households; nor did they have sexual partnerships or children with those in non-zhu households. However, those in zhuhouseholds did preferentially help and reproduce with each other. Although the tag is common knowledge to other villagers and used in cooperative and reproductive partner choice, we found no evidence that this assortment was based on cooperativeness or quality. We favour the explanation that stigmatization originally arose as a mechanism to harm female competitors. Once established, fear that the trait is transmissible may help explain the persistence of this deep-rooted cultural belief.