A population in which there is stabilizing selection acting on quantitative traits toward an intermediate optimum becomes monomorphic in the absence of mutation. Further, genotypes that show least environmental variation are also favored, such that selection is likely to reduce both genetic and environmental components of phenotypic variance. In contrast, intraspecific competition for resources is more severe between phenotypically similar individuals, such that those deviating from prevailing phenotypes have a selective advantage. It has been shown previously that polymorphism and phenotypic variance can be maintained if competition between individuals is “effectively” stronger than stabilizing selection. Environmental variance is generally observed in quantitative traits, so mechanisms to explain its maintenance are sought, but the impact of competition on its magnitude has not previously been studied. Here we assume that a quantitative trait is subject to selection for an optimal value and to selection due to competition. Further, we assume that both the mean and variance of the phenotypic value depend on genotype, such that both may be affected by selection. Theoretical analysis and numerical simulations reveal that environmental variance can be maintained only when the genetic variance (in mean phenotypic value) is constrained to a very low level. Environmental variance will be replaced entirely by genotypic variance if a range of genotypes that vary widely in mean phenotype are present or become so by mutation. The distribution of mean phenotypic values is discrete when competition is strong relative to stabilizing selection; but more genotypes segregate and the distribution can approach continuity as competition becomes extremely strong. If the magnitude of the environmental variance is not under genetic control, there is a complementary relationship between the levels of environmental and genetic variance such that the level of phenotypic variance is little affected.