Cryptic species are morphologically identical but genetically distinct, and are prominent across numerous phyla. The coexistence of such closely related species on local scales would seem to run counter to traditional coexistence and competition theory; it has been hypothesized as a consequence of differences in their resource use or tolerances to environmental conditions. We developed an individual-based model of a community of three cryptic Litoditis marina (nematode) species, to understand how individual-level interspecific and intraspecific interactions might explain the coexistence of these closely related species. The model incorporates individuals' reproduction, competition, dispersal and resource use. Data characterizing the cryptic species (growth rates, dispersal ability, competitive interactions and responses to changing environmental conditions) were obtained from laboratory experiments involving both mono-and multispecific nematode cultures, and are used to parameterize the model. Simulation studies are used to investigate which individual-level mechanisms of dispersal and interaction lead to the characteristic population-level patterns observed experimentally. Our results highlight the key role of intraspecific competition in mediating dispersal and therefore co-occurrence of the cryptic species. The differences in dispersal also influence the response of the cryptic species to competition, a combination of factors that provides an explanation for their co-occurrence. These results provide insights into how changes in individual-level processes can be amplified to affect population-level co-occurrence.