Competition is the most common type of interaction occurring between wood-decaying higher fungi. Since competition for nutrients in organic resources is effectively brought about by competition for space, the common division into interference and exploitation competition is not very appropriate. Fungal competition can be divided into primary resource capture (obtaining uncolonized resources) and secondary resource capture (combat to obtain resources already colonized by other fungi). Combative mechanisms include antagonism at a distance, hyphal interference, mycoparasitism and gross mycelial contact. Interactions can result in deadlock or replacement, and a hierarchy of combative ability can be discerned amongst fungi that inhabit particular resources, but within this hierarchy there exists intransitivity, modification of outcome by other species and abiotic variables. Interactions can dramatically alter mycelial function, and have potential as biological control agents of fungal pathogens of trees and in service timber.