It has been hypothesized that inter-specific competition will reduce species niche utilization and drive morphological evolution in character displacement. In the absence of a competitor, intra-specific competition may favor an expansion of the species niche and drive morphological evolution in character release. Despite of this theoretical framework, we sometimes find potential competitor species using the same niche range without any partitioning in niche. We used a database on test fishing in Sweden to evaluate the factors (inter- and intraspecific competition, predation, and abiotic factors) that could influence habitat choice of two competitor species. The pattern from the database shows that the occurrence of perch and roach occupying both littoral and pelagic habitats of lakes in Sweden is a general phenomenon. Furthermore, the results from the database suggest that this pattern is due to intra-specific competition rather than inter-specific competition or predation. In a field study, we estimated the morphological variation in perch and roach and found that, individuals of both species caught in the littoral zone were more deeper bodied compared to individuals caught in the pelagic zone. Pelagic perch fed more on zooplankton compared to littoral perch, independent of size, whereas the littoral perch had more macroinvertebrates and fish in their diet. Pelagic roach fed more on zooplankton compared to littoral roach, whereas littoral individuals fed more on plant material. Furthermore, we sampled littoral and pelagic fish from another lake to evaluate the generality of our first results and found the same habitat associated morphology in both perch and roach. The results show a consistent multi-species morphological separation in the littoral and pelagic habitats. This study suggests that intra-specific competition is possibly more important than inter-specific competition for the morphological pattern in the perch-roach system.