The PvP setting of an area determines against whom a player character (PC) may take hostile actions. This setting also influences the reaction type (friendly, neutral, or hostile) between characters. The three settings available, in order from least to most restrictive, are Full PvP, Party PvP, and No PvP. An area's setting can be made more (but not less) restrictive by the difficulty setting and (in multiplayer) a server setting. The effective setting of the current area is reported to the player as a server message in the chat window upon entering an area.
Full PvP: When full PvP is in effect, a PC can take hostile actions against any other PC. This includes outright attacks, pick pocket attempts, and (presumably accidentally) affecting party members with harmful area of effect spells that do not specifically exclude friends (such as fireball). That is, the full range of Player versus Player actions are available. This setting is only available under the "D&D hardcode rules" and "very difficult" difficulty settings.
Party PvP: When party PvP is in effect, a PC can take hostile actions against any PC not in the same party. This is similar to the full PvP setting, but protects party members from hostile actions. This setting is only available under the "D&D hardcode rules" and "very difficult" difficulty settings.
No PvP: When no PvP is in effect, a PC cannot take hostile actions against any other PC.
While the reaction type — friendly, neutral, or hostile — between most creatures is determined by faction and reputation, the reaction type between PCs is determined by the PvP setting and either being in the same party or the like/dislike toggle found in the player list. (If PCs are in the same party, the like/dislike toggle is ignored.) This extends to reaction types with associates of PCs, with each associate sharing its master's reaction type. Furthermore a PC's own associates have the same reaction type to their master as would a PC in the same party.