Parasitism influences many aspects of a host's behavior and physiology. Therefore, parasitism is also likely to influence the competitive ability of the host. Field populations of phytophagous insects are often a mix of parasitized and unparasitized conspecifics and the inclusion of parasitism in their competitive dynamics may alter expected outcomes. We investigated the influence of parasitism by the hymenopteran parasitoid Phanerotoma franklini Gahan on the competitive interactions among larvae of its host Acrobasis vaccinii Riley. We found that parasitized larvae were poorer competitors and required less food to complete development compared to unparasitized larvae. To examine the influence of parasitism on the competitive dynamics of this system, we constructed an individual-based model parameterized with our laboratory data. The model examined the role of resource availability and parasitism rate on larval survival. The model suggests that parasitized larvae (and, hence parasitoids) experience higher levels of mortality from competition than unparasitized larvae. Further, the model also suggests that the decreased consumption of resources by parasitized larvae results in a decline in the occurrence of competition as the parasitism rate increases. We suggest that these observations may be general to many parasitoid-host systems.