It has been hypothesized that the wide range of forms and complexities of phosphorus (P) in soil may result in resource partitioning that contributes to the maintenance of plant species diversity. Here, we test whether the graminoid, Deschampsia cespitosa, and the ericaceous shrub, Vaccinium vitis-idaea, which often coexist, display preferences in utilization of P forms, and differ in their production of extracellular P-degrading enzymes. We provided plants with no additional P, or P forms with decreasing lability, namely sodium phosphate (SP), D-glucose 6 phosphate (DG6P), sodium phytate (PASS), and a combination of SP, DG6P, and PASS. We also tested if preferences for P forms affected the competitive outcomes between the two species compared between conspecifics, as indicated by shoot biomass and acquisition of nitrogen (N) and P. Both D. cespitosa and V. vitis-idaea produced the greatest biomass when supplied with a mix of all three forms of P. Of the three forms of P tested alone, shoot biomass produced by both species was least when supplied with SP. D. cespitosa performed better when grown with PASS or a mix of all P forms compared with the performance of V. vitis-idaea on these substrates. This was reflected by substantially greater phytase activity on the surface of its roots compared with V. vitis-idaea. In contrast, V. vitis-idaea produced more phosphomonoesterase to hydrolyze the simple organic P form, DG6P. Although N was kept constant in the treatments, the ability of plants to acquire it was dependent on species identity, competition, and P supply. These findings provide direct evidence for preferences toward specific forms of P and indicate a key role played by organic forms of P. The results support the idea that partitioning for soil P is one factor regulating plant competition, and ultimately, community composition. Our data also highlight the importance of the interplay between P supply and N acquisition.