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Dormancy allows organisms to survive hostile conditions and is hypothesized to enable species to coexist in fluctuating environments. Although determining how species avoid extinction is critical to understanding the dynamics of natural populations, experimental work exploring if and when dormancy rescues populations from extinction remains rare. We conducted an experiment, where we grew two species of nematode at three temperatures. Strains of Caenorhabditis elegans had mutations altering their propensity to enter a dormant stage and Caenorhabditis briggsae was a single strain with a wildtype background. We used those empirical results to parameterize a model and simulate competitive outcomes in fluctuating environments between the two species. We show that upregulating the dormancy pathway rescues populations that would otherwise go extinct, thereby increasing coexistence between competing species. By leveraging the genetic tools available from a model system, this study provides experimental confirmation that dormancy specifically facilitates species coexistence and thereby promotes diversity. This study system could be used more expansively to explore the role of dormancy in species interactions. [ABSTRACT FROM AUTHOR]