The historical development of the English reciprocal expression each other exemplifies different aspects of language change, both morphosyntactic and semantic. This article examines the formation of the reciprocal marker from the perspective of grammaticalization theory, with a special focus on the relationship between grammaticalization and lexicalization. It will be argued that an adequate distinction between lexicalization and grammaticalization can only be achieved if we define the two concepts with reference not to an expression's grammatical status before and after the change, but rather to the diachronic processes involved, namely context expansion in the case of grammaticalization, and univerbation combined with fossilization in the case of lexicalization. The development of each other provides evidence for this view. It has its origin in syntactic structures of the type Each of the kings hates the others and has undergone univerbation and fossilization as well as context expansion. It will also be shown that definitions of lexicalization and grammaticalization that are too closely linked to the opposition between lexicon and grammar are problematic for an analysis of the changes undergone by the reciprocal marker. Furthermore, our analysis regards the development of each other as a case of simultaneous lexicalization and grammaticalization.