Biological communities are usually dominated by a few species and show characteristically skewed species abundance distributions. Although niche apportionment and resource competition are sometimes implicated in such patterns, few experimental studies have shown direct links between resource limitation, competition with dominant species and their impacts on the overall diversity and composition of large natural communities. Here I report the results of an experiment in which I first studied species diversity and composition in two Costa Rican nectar-feeding butterfly communities numerically dominated by two species of Anartia butterflies. Then I removed Anartia from these communities to study changes in resource availability, species abundance relationships, community diversity and composition as an outcome of the removal of the dominant competitors. In the face of competition with Anartia, nectar was scarce, species abundance distributions were highly skewed, and species diversity was low in both communities. Within two weeks after the removal of Anartia, there were parallel changes in both communities: competition for nectar reduced and the nectar quantity increased substantially, which facilitated increase in community diversity and resulted in significantly less skewed species abundance distributions. Higher nectar quantity also enabled the distribution of body size and proboscis length of constituent species in the communities to expand at both ends. This study thus experimentally showed that resource competition with the dominant species was excluding many species from the communities, lowering their diversity and skewing relative species abundance relationships. These findings are of fundamental importance for competition theory and community ecology because they indicate ways in which diverse communities may be affected by and recover from competition with dominant species.