In a set of laboratory experiments, we examined competition for phosphorus between algae and bacteria under various carbon:phosphorus (C:P) supply ratios in spatially homogeneous and heterogeneous microcosms. Experimental results were compared to those predicted by theoretical models of resource competition. In the spatially heterogeneous microcosm, algae that were inferior competitors for P persisted in vessels with high local C:P supply ratios that would cause exclusion in the spatially homogeneous microcosms. Resource competition theory, adapted to this system, provided a starting point for explaining these results. Spatial structure can enhance local diversity because locally inferior competitors are transported from source habitats into sink habitats where they would otherwise be excluded. Such local sources were determined by their resource supply ratios. These results verify the hypothesis that spatial processes enhance local diversity when a system of local habitats is divided into sources and sinks in such a way that each persisting species has at least one source within the system. However, existing theoretical models did not accurately predict distributions of competitor abundance within this experimental system.