Cell competition is a short-range cell-cell interaction leading to the proliferation of winner cells at the expense of losers, although either cell type shows normal growth in homotypic environments. Drosophila Myc (dMyc; Dm-FlyBase) is a potent inducer of cell competition in wing epithelia, but its role in the ovary germline stem cell niche is unknown. Here, we show that germline stem cells (GSCs) with relative lower levels of dMyc are replaced by GSCs with higher levels of dMyc. By contrast, dMyc-overexpressing GSCs outcompete wild-type stem cells without affecting total stem cell numbers. We also provide evidence for a naturally occurring cell competition border formed by high dMyc-expressing stem cells and low dMyc-expressing progeny, which may facilitate the concentration of the niche-provided self-renewal factor BMP/Dpp in metabolically active high dMyc stem cells. Genetic manipulations that impose uniform dMyc levels across the germline produce an extended Dpp signaling domain and cause uncoordinated differentiation events. We propose that dMyc-induced competition plays a dual role in regulating optimal stem cell pools and sharp differentiation boundaries, but is potentially harmful in the case of emerging dmyc duplications that facilitate niche occupancy by pre-cancerous stem cells. Moreover, competitive interactions among stem cells may be relevant for the successful application of stem cell therapies in humans.