Adding fluctuations to models of resource competition provides one solution to Hutchinson's paradox. Fundamental to fluctuation dependent mechanisms of coexistence are differential species' responses to environmental fluctuations through time. The covariance between the environment and competition this generates leads to compensatory population dynamics, now thought to be important for community stability. We tested this theory experimentally using freshwater diatoms. We measured the growth of Cyclotella pseudostelligera and Fragilaria crotonensis over a range of temperatures. Cyclotella showed a higher growth rate and higher silicate assimilation rate between 6°C and 18°C, while Fragilaria showed greater competitive ability above 18°C. These results were used to parameterize a resource competition model. Numerical simulation of this model predicted stable coexistence and compensatory dynamics under fluctuating but not constant temperature. A long-term competition experiment with Cyclotella and Fragilaria confirmed the predictions of the model. These results demonstrate the role abiotic fluctuations may play in maintaining the diversity of natural communities.