Habitat heterogeneity can promote coexistence between herbivores of different body size limited to different extents by resource quantity and quality. Red deer (Cervus elaphus) are known as superior competitors to smaller species with similar diets. We compared competitive interactions and habitat use between red deer and Alpine chamois (Rupicapra rupicapra) in two adjacent valleys in a strictly protected area in the Central Alps. Red deer density was higher in the valley with higher primary productivity. Only here was horn growth in kid and yearling chamois (as a measure for body condition) negatively correlated with red deer population size, suggesting interspecific competition, and chamois selected meadows with steeper slopes and lower productivity than available on average. Conversely, red deer selected meadows of high productivity, particularly in the poorer area. As these were located mainly at lower elevations, this led to strong altitudinal segregation between the two species here. Local differences in interspecific competition thus coincided with differences in habitat preference and-segregation between areas. This suggests that spatial habitat and resource heterogeneity at the scale of adjacent valleys can provide competition refuges for competitively inferior mountain ungulates which differ from their superior competitor in their metabolic requirements.