Articulated in its classical form by Anselm of Canterbury in Cur Deus Homo ("Why the God-Man," 1098). Anselm argued, against the prevailing Ransom Theory, that Christ's death satisfied not Satan but God Himself — specifically, God's honor, which human sin had offended. Sin, Anselm observed, is not merely breaking a rule; it is a failure to render to God the honor due His majesty. The debt is infinite (because God is infinite) and cannot be paid by finite humans. Therefore God must become man: only a God-man could owe the debt (as man) and pay the debt (as God). This is the classical medieval theology of the atonement and the direct ancestor of the Reformation's Penal Substitution.
The Satisfaction Theory was a massive theological advance. It correctly located the atonement as Godward rather than Satanward, and it got the logic of Incarnation right: Christ must be both God and man to be Mediator (1 Timothy 2:5). But Anselm's specific framework — offended divine honor — reflected his feudal context more than the biblical emphasis. In the Bible, what God's law and justice demand is the foreground, not His honor as a feudal lord. The Reformers took the best of Anselm and sharpened it: Penal Substitution argues that Christ bears the legal penalty our sins deserve — divine wrath is a judicial category, not a feudal-honor category. That clarifies biblical texts like Isaiah 53:5-6, Romans 3:24-26, Galatians 3:13 — "Christ redeemed us from the curse of the law by becoming a curse for us." The wrath was propitiated (1 John 2:2), the law was satisfied (Matthew 5:17-18), justice was vindicated (Romans 3:26). Satisfaction Theory provides the ontological architecture (why a God-man); Penal Substitution provides the legal specification (what was satisfied). Both belong together. Hold them as complementary, and the atonement gains its full biblical depth.