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We experimentally explored population- and individual-level effects on Arctic charr (Salvelinus alpinus) resulting from resource competition with its common European competitor, the brown trout (Salmo trutta). At the population level, we compared performance of the two species in their natural sympatric state with that of Arctic charr in allopatry. At the individual level, we established selection gradients for morphological traits of Arctic charr in allopatric and in sympatric conditions. We found evidence for interspecific competition likely by interference at the population level when comparing differences in average performance between treatments. The growth and feeding rates did not differ significantly between allopatric and sympatric Arctic charr despite lower charr densities (substitutive design) in sympatric enclosures indicating that inter- and intraspecific competition are of similar strength. The two species showed distinct niche segregation in sympatry, and brown trout grew faster than Arctic charr. Arctic charr did not expand their niche in allopatry, indicating that the two species compete to a limited degree for the same resources and that interference may suppress the growth of charr in sympatric enclosures. At the individual level, however, we found directional selection in sympatric enclosures against individual Arctic charr with large head and long fins and against individuals feeding on zoobenthos rather than zooplankton indicating competition for common resources (possibly exploitative) between trout and these charr individuals. In allopatric enclosures these relations were not significant. Diets were correlated to the morphology supporting selection against the benthic-feeding type, i.e. individuals with morphology and feeding behaviour most similar to their competitor, the benthic feeding brown trout. Thus, this study lends support to the hypothesis that Arctic charr have evolved in competition with brown trout, and through ecological character displacement adapted to their present niche.