We used trained barn owls to introduce a controlled predation threat to two species of gerbil, Gerbillus allenbyi and G. pyramidum in a system of 2-ha, sandy-substrate field enclosures in the Negev Desert, Israel. Using the principles of optimal density-dependent habitat selection, we estimated several coefficients of population interaction focusing on G. allenbyi. G. allenbyi exhibits strong intraspecific competition. In the absence of owls, G. pyramidum competes with it (α = -0.35). We estimated the slope of the G. allenbyi victim isocline to be -0.60. The competitive effect of G. pyramidum disappeared in the presence of owl, although the intraspecific competition remained. Our results indicated that in the presence of owls, the threat of predation overwhelms the cost of interspecific competition.