Dispersal theory generally predicts kin competition, inbreeding, and temporal variation in habitat quality should select for dispersal, whereas spatial variation in habitat quality should select against dispersal. The effect of predation on the evolution of dispersal is currently not well-known: because predation can be variable in both space and time, it is not clear whether or when predation will promote dispersal within prey. Moreover, the evolution of prey dispersal affects strongly the encounter rate of predator and prey individuals, which greatly determines the ecological dynamics, and in turn changes the selection pressures for prey dispersal, in an eco-evolutionary feedback loop. When taken all together the effect of predation on prey dispersal is rather difficult to predict. We analyze a spatially explicit, individual-based predator-prey model and its mathematical approximation to investigate the evolution of prey dispersal. Competition and predation depend on local, rather than landscape-scale densities, and the spatial pattern of predation corresponds well to that of predators using restricted home ranges (e.g. central-place foragers). Analyses show the balance between the level of competition and predation pressure an individual is expected to experience determines whether prey should disperse or stay close to their parents and siblings, and more predation selects for less prey dispersal. Predators with smaller home ranges also select for less prey dispersal; more prey dispersal is favoured if predators have large home ranges, are very mobile, and/or are evenly distributed across the landscape.