Infections with the malaria parasite Plasmodium falciparum typically comprise multiple strains, especially in high-transmission areas where infectious mosquito bites occur frequently. However, little is known about the dynamics of mixed-strain infections, particularly whether strains sharing a host compete or grow independently. Competition between drug-sensitive and drug-resistant strains, if it occurs, could be a crucial determinant of the spread of resistance. We analysed 1341 P. falciparum infections in children from Angola, Ghana and Tanzania and found compelling evidence for competition in mixed-strain infections: overall parasite density did not increase with additional strains, and densities of individual chloroquine-sensitive (CQS) and chloroquine-resistant (CQR) strains were reduced in the presence of competitors. We also found that CQR strains exhibited low densities compared with CQS strains (in the absence of chloroquine), which may underlie observed declines of chloroquine resistance in many countries following retirement of chloroquine as a first-line therapy. Our observations support a key role for within-host competition in the evolution of drug-resistant malaria. Malaria control and resistance-management efforts in high-transmission regions may be significantly aided or hindered by the effects of competition in mixed-strain infections. Consideration of within-host dynamics may spur development of novel strategies to minimize resistance while maximizing the benefits of control measures.