The environmental stressors that females face before egg‐laying, such as competition for resources, can impact the fitness prospects of the female as well as her offspring through hormone‐mediated maternal effects. In obligate secondary cavity‐nesting species, suitable nest‐holes are a limited resource, so gaining access to nest‐sites may require competition with other individuals. In the Western Bluebird Sialia mexicana, we experimentally evaluated whether female exposure to increased competition for nest cavities (reduced available nest‐holes plus exposure to a competitor's decoy and vocalizations) during the period of nest construction affects her offspring's developmental trajectory, survival probability and behaviour through an increase in the concentration of testosterone in the egg yolk. Chicks from experimental females had a lower body mass at age 3 days, followed by a faster growth rate during the rapid growth phase, a slower growth rate during the slow growth phase and larger tarsus at age 15 days (only male offspring). Additionally, experimental chicks exhibited a lower breathing rate. However, female exposure to stronger competition for nest cavities during nest construction did not affect testosterone concentration in the egg yolk. Differential testosterone deposition in yolk is therefore apparently not the underlying mechanism of the effects observed, which may be attributed to changes in females' parental behaviour triggered by competition for breeding sites.