The mesopredator release hypothesis (MRH) predicts that a reduced abundance of top-order predators results in an increase in the abundance of smaller predators due to the cessation of intraguild predation and competition. In turn, small prey preferred by mesopredators are predicted to benefit from the suppressive effects of top-order predators on mesopredators. In support of the MRH a growing body of evidence shows that Australia's largest terrestrial predator, the dingo (Canis lupus dingo, body mass of 15–25 kg), might suppress the abundance of the smaller invasive red fox (Vulpes vulpes, body mass of 3.5–7.5 kg). Foxes are implicated in the declines of native rodents and marsupials in arid Australia; where foxes are rare, native prey species are more likely to persist. However, the mechanism by which dingoes suppress fox populations and benefit native mammal species is not well understood. We used scat analysis and prey selectivity indexes to examine the potential for dietary competition between dingoes and foxes at 3 arid sites. Dietary overlap between dingoes and foxes was high (≥85%) at all sites. Dingoes and foxes preferentially selected identical prey types in greater proportion to their relative abundance at all sites, but foxes tended to consume smaller prey than dingoes. Dingoes consumed more large- (>999 g) and medium-sized (100–999 g) mammals, and foxes consumed greater numbers of smaller (<100 g) mammals. At 2 sites rabbits were the most frequently occurring prey for both predators and were consumed in greater proportion than their abundance. The extensive dietary overlap and preferential selection by the predators for the same prey suggest that considerable potential exists for dietary competition between these predators. Fox remains found in dingo scats provided evidence of intraguild predation. Our results support the notions that dingoes could suppress fox populations through both dietary competition and direct killing and that this suppression of foxes could benefit small prey.