The effectiveness of sanctions in disciplining the behavior of target counties has been at the center of a lively and long debate. Providing a clear and reliable answer to this empirical question has proved particularly difficult, given the insurmountable challenge posed by the selection problems that permeate the empirical study of sanctions. Additionally, scholars have often studied sanctions in isolation, without treating them as one alternative within the toolkit of foreign polic ies a country can adopt. To sidestep these issues, we build a game theoretic model to study how sanctions interact with military interventions within the context of a deterrence game. We show how sanctions can act as complements or substitutes for military intervention in the quest for deterrence. By building a benchmark model where the possibility of imposing sanctions is not present, we can assess the actual effect of sanctions on transgressions from target countries. We show when sanctions make deterrence via the threat of military intervention possible, and when instead the existence of a deterrence effect inhibits the effectiveness of sanctions in preventing or reducing the severity of transgressions. Our results have novel implications for the empirical study of the effectiveness of sanctions and help us understand when and how sanctions and the threat of military intervention can be combined to maximize deterrence.