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1. Local adaptation is a major factor shaping a species’ range. Studies on adaptation to local abiotic conditions are numerous, but adaptation to neighbour conditions has been almost neglected, and these two have rarely been separated experimentally. We hypothesized that adaptation to abiotic stress (e.g. fast development, drought resistance) dominates at the stressful end of the gradient, while adaptation to competition (e.g. large plant size) is more common at the benign end of the distribution range. 2. We conducted a reciprocal sowing experiment coupled with a removal experiment in the field for two winter annual grass species Bromus fasciculatus C. Presl. and Brachypodium distachyon (L.) Beauv. from Mediterranean and arid populations in Jordan. The two species were also grown under standard conditions for evaluating whether traits indicative of competitive ability and tolerance to stress are more common for either of the ecotypes. 3. Adaptation to abiotic stress could not be tested because our experiment was performed in a favourable year where water was not limiting in either of the sites. Competition was intense in both sites for the two populations of each species but competitive exclusion was observed only in the Mediterranean site. Mediterranean populations produced consistently more biomass and exhibited later onset of flowering than arid populations, both in the field and under standard conditions. 4. Mediterranean populations also showed better competitive response ability however stress tolerance was no different to that of arid populations. 5. This study indicates that competition and length of the growing season are major selective constraints at the two extremes of the ecological range along aridity gradients. We suggest that drought stress increases in importance during dry years and studies on local adaptation along climatic gradients may help predict the effect of global change on future species’ distributions. [ABSTRACT FROM AUTHOR]