The dilution method is the principal tool used to infer in situ microzooplankton grazing rates. However, grazing is the only mortality process considered by the theoretical model underlying the interpretation of dilution method experiments. We show an alternative interpretation arises when there is concurrent niche competition within the plankton community. We find that grazing rates may be overestimated -- the degree of overestimation is related to the importance of niche competition relative to zooplankton grazing. Thus, we propose a modification to the dilution method to disentangle the effects of niche competition and zooplankton grazing. Our theoretical results suggest the revised "Z-dilution" method can robustly infer grazing mortality, regardless of the dominant plankton mortality driver. Further, we show it is possible to independently estimate both grazing mortality and niche competition when the classical and Z-dilution methods are used in tandem. We discuss the significance of these results for quantifying plankton mortality rates.