Dishonesty is an integral part of our social world, influencing domains ranging from finance and politics to personal relationships. Anecdotally, digressions from a moral code are often described as a series of small breaches that grow over time. Here we provide empirical evidence for a gradual escalation of self-serving dishonesty and reveal a neural mechanism supporting it. Behaviorally, we show that the extent to which participants engage in self-serving dishonesty increases with repetition. Using functional MRI, we show that signal reduction in the amygdala is sensitive to the history of dishonest behavior, consistent with adaptation. Critically, the extent of reduced amygdala sensitivity to dishonesty on a present decision relative to the previous one predicts the magnitude of escalation of self-serving dishonesty on the next decision. The findings uncover a biological mechanism that supports a ‘slippery slope’: what begins as small acts of dishonesty can escalate into larger transgressions.