Resource competition within a group of cooperators is expected to decrease selection for cooperative behavior 1, 2, 3, 4, 5 and 6 but can also result in diversifying selection for the use of different resources, which in turn could retard the breakdown of cooperation. Diverse groups are likely to be less susceptible to invasion by noncooperating social cheats: First, competition repression [7] resulting from character displacement 8 and 9 may provide less of a selective advantage to cheating; second, cheats may trade off the ability to exploit cooperators that specialize in one type of resource against cooperators that specialize in another [10]; third, diverse communities of any kind may have higher invasion resistance because there are fewer resources available for an invader to use 11 and 12. Furthermore, diverse groups are likely to be more productive than clonal groups if a wider range of total resources are being used 13, 14 and 15. We addressed these issues by using the cooperative trait of biofilm formation in Pseudomonas fluorescens 3 and 16. Character displacement through resource competition evolved within biofilms; productivity increased with increasing character displacement, and diverse biofilms were less susceptible to invasion by cheats. These results demonstrate that diversification into different ecological niches can minimize selection against cooperation in the face of local resource competition.