Cooperation among genetically unrelated individuals is commonly explained by the potential for future reciprocity or by the risk of being punished by group members. However, unconditional altruism is more difficult to explain. We demonstrate that unconditional altruism can evolve as a costly signal of individual quality (i.e. a handicap) as a consequence of reciprocal altruism. This is because the emergent correlation between altruism and individual quality in reciprocity games can facilitate the use of altruism as a quality indicator in a much wider context, outside the reciprocity game, thus affecting its further evolution through signalling benefits. Our model, based on multitype evolutionary game theory shows that, when the additive signalling benefit of donating help exceeds the cost for only some individuals (of high–quality state) but not for others (of low–quality state), the population possesses an evolutionarily stable strategy (ESS) profile wherein high–quality individuals cooperate unconditionally while low–quality individuals defect or play tit–for–tat (TfT). Hence, as predicted by Zahavi's handicap model, signalling benefits of altruistic acts can establish a stable generosity by high–quality individuals that no longer depends on the probability of future reciprocation or punishment.