We consider an interacting particle system with two species under strong competition dynamics between the two species. Then, through the hydrodynamic limit procedure for the microscopic model, we derive a one-phase Stefan type free boundary problem with nonlinear diffusion, letting the competition rate divergent. Non-linearity of diffusion comes from a zero-range dynamics for one species while we impose the other species to weakly diffuse according to the Kawasaki dynamics for technical reasons, which macroscopically corresponds to the vanishing viscosity method.