Many metagenomic sequencing studies have observed the presence of closely related bacterial species or genotypes in the same microbiome. Previous attempts to explain these patterns of microdiversity have focused on the abiotic environment, but few have considered how biotic interactions could drive patterns of microbiome diversity. We dissected the patterns, processes, and mechanisms shaping the ecological distributions of three closely related Staphylococcus species in cheese rind biofilms. Paradoxically, the most abundant species (S. equorum) is the slowest colonizer and weakest competitor based on growth and competition assays in the laboratory. Through in vitro community reconstructions, we determined that biotic interactions with neighboring fungi help resolve this paradox. Species-specific stimulation of the poor competitor by fungi of the genus Scopulariopsis allows S. equorum to dominate communities in vitro as it does in situ. Results of comparative genomic and transcriptomic experiments indicate that iron utilization pathways, including a homolog of the S. aureus staphyloferrin B siderophore operon pathway, are potential molecular mechanisms underlying Staphylococcus-Scopulariopsis interactions. Our integrated approach demonstrates that fungi can structure the ecological distributions of closely related bacterial species, and the data highlight the importance of bacterium-fungus interactions in attempts to design and manipulate microbiomes.