Phenotypic plasticity has primarily been studied in the context of adaptation to environmental fluctuations and its underlying genetic mechanisms. However, its impact on competition and coexistence has rarely been addressed. In this paper we analyzed the ecological and evolutionary implications of phenotypic plasticity in diel vertical migration of competing, physiologically distinguishable,Daphnia populations. We developed a model that evaluates the competitive strength of daphnids which are food limited and which face predation. Competitive strength is assessed by a population's ability to invade and defend a previously established site. Phenotypically plastic individuals were assumed to choose an evolutionarily stable migration strategy at any time during the invasion process. We found plasticity to increase a population's competitive ability and in special cases to support coexistence of similar populations. Including community structure in analyzing the adaptive value of phenotypic plasticity reveals aspects that are not directly inferable from isolated population models. Hence, selection for plasticity may be more widespread than generally expected.