Direct interactions between marine mammals and commercial fisheries are a worldwide conservation challenge. Observer programmes remain the most effective and reliable method for collecting data on these interactions. In the Falkland Islands—home to globally significant seal populations and commercial squid fisheries, seal-fishery interactions have escalated in recent years, prompting management concerns. Complete observer coverage within the squid fishery presents a valuable opportunity to investigate the nature, extent, and drivers of these interactions. Integrating multi-year observer records with extensive ancillary (i.e. vessel logbook and oceanographic) datasets, we examine the operational and environmental factors influencing the occurrence of seal-fishery interactions. Our findings show interactions most frequently occur in the main squid fishing grounds during trawls associated with high catch quantities. Assessment of long-term catch data (both finfish and squid) also suggests the increase in seal-fishery interactions may be caused by collapses in dominant finfish stocks over the past 20 years, constricting foraging resources available to seals. Taken together, our findings indicate resource competition may be a mechanism of interactions. To help mitigate this issue, we advocate for the development of ecosystem-based fisheries management, which considers the trophic effects of fishing practices and the energetic requirements of local marine predator populations.