Does competition influence patterns of coexistence between closely related taxa? Here we address this question by analyzing patterns of range overlap between related species of birds (‘sister pairs’) co‐occurring on a tropical elevational gradient. We explicitly contrast the behavioral dimension of interspecific competition (interference competition) with similarity in resource acquisition traits (exploitative competition). Specifically, we ask whether elevational range overlap in 118 sister pairs that live along the Manu Transect in southeastern Peru is predicted by proxies for competition (intraspecific territorial behavior) or niche divergence (beak divergence and divergence times, an estimate of evolutionary age). We find that close relatives that defend year‐round territories tend to live in non‐overlapping elevational distributions, while close relatives that do not defend territories tend to broadly overlap in elevational distribution. In contrast, neither beak divergence nor evolutionary age was associated with patterns of range limitation. We interpret these findings as evidence that behavioral interactions – particularly direct territorial aggression – can be important in setting elevational range limits and preventing coexistence of closely related species, though this depends upon the extent to which intraspecific territorial behavior can be extended to territorial interactions between species. Our results suggest that interference competition can be an important driver of species range limits in diverse assemblages, and thus highlight the importance of considering behavioral dimensions of the niche in macroecological studies.