The major theories regarding the combined influence of the environment and species interactions on population and community dynamics appear to conflict. Stress/ disturbance gradient models of community organization, such as the stress gradient hypothesis, emphasize a diminished role for competition in harsh environments whereas modern coexistence theory does not. Confusion about the role of species interactions in harsh environments is perpetuated by a disconnect between population dynamics theory and data. We linked theory and data using response surface experiments done in the field to parameterize mathematical, population-dynamic competition models. We replicated our experiment across two environments that spanned a common and important environmental stress gradient for determining community structure in benthic marine systems. We generated quantitative estimates of the effects of environmental stress on population growth rates and the direction and strength of intra- and interspecific interactions within each environment. Our approach directly addressed a perpetual blind spot in this field by showing how the effects of competition can be intensified in stressful environments even though the apparent strength of competition remains unchanged. Furthermore, we showed how simultaneous, reciprocal competitive and facilitative effects can stabilize population dynamics in multispecies communities in stressful environments.