Stable coexistence of ecologically similar species is often a complicated phenomenon involving a synergy of biotic and abiotic factors. We investigated competitive interactions and small scale division of space in the closely related vole species Microtus montanus and Microtus longicaudus, which co- occur across the Greater Yellowstone Ecosystem (GYE) in the Rocky Mountains. We directly manipulated in situ populations of these species in two habitat types over three consecutive years. We confirmed previously described habitat associations of the study species: M. montanus was most abundant in open grassy meadows; M. longicaudus was most abundant in ecotonal areas with greater woody vegetation cover. Additionally, removal experiments conducted in both habitat types revealed a habitat-dependent competitive interaction between species: M. montanus excluded M. longicaudus from resource-rich meadows; M. longicaudus was limited to patchy ecotonal habitats that M. montanus was not observed to colonize. We did not observe an effect of the experimental treatment on either species' body mass. The outcome of the asymmetric competition between these species is influenced by local environmental conditions and enables their coexistence in the GYE.