First let me point out that I'm pretty much a beginning DM. I'm about 10-12 sessions into my first real campaign. I've watched a lot of YouTube videos about DMing, and have poked through a lot of advice on various forums. I've also played in a handful of campaigns, and run a few short-lived campaigns. But this is my first time truly DMing a long-term campaign, and also encountering a situation like this first-hand. I'm curious to get some outside input.

The group is made up of friends and co-workers who all know each other. One of the players got miffed because another player (who has a bag of holding) was making fun of him for not having a bag of holding. So he attempted to steal the other player's bag of holding. I took it to be mostly fun and games and had him roll a Sleight of Hand against the other player's Perception. He won, and took the bag of holding. I'd assumed he would just give it back as sort of a practical joke, but instead, he kept it. Then he tried to convince the other player that he hadn't taken it, so I (still thinking it was mostly just a joke) made him roll Deception against Insight. He won. As things went on, he basically refused to give the bag back, and kept pointing out that the other player's character had no idea what was going on. There was a lot of back and forth both OOC and via role-playing. The player whose bag was stolen got more and more irritated to the point where he stopped talking to the "thief". Eventually the thieving player gave back the bag of holding, but it made the rest of the session pretty awkward as the "victim" kept sarcastically bringing the situation up for the rest of the session.

Any advice on how to either prevent stuff like this, or maybe smooth it over before it turns into a really awkward situation?

Ironically, in the climactic fight at the end of that session, the "thief" character actually got killed in combat, which was pretty shocking to the group. And the "victim" character is a Cleric who happens to have Revivify. After about 20 minutes of arguing and posturing, the cleric used the spell and brought the "thief" back to life.

Yikes. Both players sound like really immature jerks in this scenario. I'm wondering if there's some greater conflict occurring outside of the game and these two are just expressing their existing dislike for each other in-game.

It is very rare in my games for there to be more than one bag of holding in a party. While only one character may possess the bag of holding, it's used communally for anyone who wants to store excess stuff - so it doesn't really matter who is carrying it, since everyone is allowed to use it. You may want to suggest a similar policy for your party, to remove any pettiness or jealousy about who gets to hold the bag of holding.

Definitely sounds like out-of-character tension is seeping into your game here. As a DM, you're not just the arbiter for the in-game world, but also refereeing the game table too. If you think it's getting out of hand, it's time to step in – though I appreciate you thought it was all in good fun at the time.

Over the years, I've come to remove this sort of PvP from the table. It just causes more trouble than it's worth, and can really kill a player's story. Things like rolling insight against a player to see if they're lying; trying to steal items from other players; or rolling persuasion to get other players do things, all takes away from their agency – nobody likes having to have their character do something they don't want to at the hands of another player. This can be compounded when a DM then asks you to make a roll that doesn't go your way, when you never wanted to have to make it in the first place.

That's not to say it can't happen. Sometimes, a player might ask another if 'there's any chance I'd know if you're lying?', and I leave it to the opposing player to decide whether they're happy for an insight check to be rolled. Same goes for trying to steal something, or persuasion checks, etc. This respectful approach, when both players are on board with it, makes it feel less like an attack in that regard, and keeps it friendly.

Ultimately, it'd be nice if players could keep the knowledge that you're all playing a game at the forefront of their minds. But as with any competition, when PvP happens, people can get upset – particularly when it removes their agency. 

Good point regarding PvP. We have a similar policy - that if two players want to use rolls to resolve a conflict, they are welcome to, but the GM should not require it. It's better to have the players negotiate the resolution to a PvP conflict on their own terms; if one of them simply says, "I don't want you to steal from me," that's all it should take to prevent the would-be thief, and if said would-be thief presses the issue, then the GM steps in and says, "They don't consent to the action, so you don't get to do it. End of story - let's move on with this scene."

1) Table rule, no PvP - attacking or stealing or whatever

2) wtf, you took something from the Cleric?! That's dumb beyond measure. Oh you're dead? Sorry, I had some diamonds around here but oh dear, I don't know where the bag went that had the diamonds. Bummer. Stay dead.

Yeah, I think I will make a no PvP rule. It has come up in the past but has always just been comedic. I guess giving an inch is not a good idea in this situation.