Competition strongly affects individual effort and performance for both individuals and groups. Especially in work settings, these effort gains might come at the cost of individual well-being. The present study tested whether competition increases both effort (as indicated by task performance) and stress (in terms of cardiovascular reactivity and affective response), and whether this effect is further qualified by the type of competition (interindividual vs. intergroup), using a cognitive computer-based task and a 2 (Group: Yes, No) × 2 (Competition: Yes, No) × 2 (Gender) factorial design (N = 147). All participants either worked as a representative of a group or as an individual, and were offered performance-related incentives distributed in a lottery. In the competition conditions, participants were informed that they competed with someone else, and that only the winning person/team would take part in the lottery. Consistent with expectations, competition increased both individual effort and cardiovascular reactivity compared to non-competitive work. Moreover, for female participants, intergroup competition triggered increased effort and more positive affect than interindividual competition. Aside from documenting costly side-effects of competition in terms of stress, this study provides evidence for a stress-related explanation of effort gains during intergroup competition as compared to interindividual competition.