Most organisms show self-sustained circadian oscillations or biological clocks which control their daily fluctuations in behavioural and physiological activities. While extensive progress has been made in understanding the molecular mechanisms of biological clocks, there have been few clear demonstrations of the fitness value of endogenous rhythms. This study investigated the adaptive significance of circadian rhythms in a Drosophila parasitoid community. The activity rhythms of three sympatric Drosophila parasitoids are out of phase, the competitively inferior parasitoid species being active earlier than the superior competitor. This temporal segregation appears at least partially determined by endogenous periods of the clock which also vary between species and which correlate the time of activity. This earlier activity of the inferior competitor significantly reduces its intrinsic competitive disadvantage when multiparasitism occurs, thus suggesting that natural selection acting on the phase of the rhythm could substantially deviate the endogenous period from the optimal ca. 24 h period. This study demonstrates that temporal segregation of competing species could be endogenously controlled, which undoubtedly favours their coexistence in nature and also shows how natural selection can act on biological clocks to shape daily activity patterns.