Whether microbial interactions are predominantly cooperative or competitive is a central question in microbial ecology, and determines the composition and stability of microbial communities. The secretion of iron chelators called siderophores is a model system for cooperative interactions, even though these chelators can also mediate competition by depriving competitors of iron. Using a genetically engineered experimental system based on the Pseudomonas aeruginosa siderophore pyochelin, we found that secreting siderophores to inhibit a competitor can lead to higher benefits than secreting siderophores to make iron available. Based on thermodynamic modeling, we propose that competitive inhibition by siderophores is efficient in kinetically controlled saturated systems, where dissolution of precipitated iron phases is slow. Under these conditions, met in many natural environments, secreted siderophores temporarily reduce the concentration of available iron and can thus induce growth inhibition in a competing strain, even at high iron concentrations. These findings give insight into the function of siderophores: In addition to its cooperative nature, siderophore secretion could also be a widespread mechanism for mediating competitive interactions. Our functional investigation reveals a complexity in microbial interaction networks that would remain hidden when focusing on genomic information alone.