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Competition is believed to be a central force limiting local diversity and controlling the structure of plant communities. However, it has been proposed that the stressed understory environment limits total understory plant density to such low levels that competitive exclusion cannot be an important factor limiting the local diversity of understory plants. To evaluate the importance of inter-seedling competition, we performed a seedling competition experiment with five shade-tolerant species in a tropical moist forest in Panama. Three-month-old seedlings were transplanted into the forest singly or with their roots intertwined with a single conspecific or heterospecific seedling in all pairwise species combinations. If competition is important, performance (survival, stem height, and number of leaves after one and six years) would be expected to be lowest with a conspecific neighbor and greatest without a neighbor. The experiment was replicated in five 0.24-m2 plots at each of 20 sites in tall secondary forest. To test whether seedling performance differed among treatments we fitted linear mixed models (LMM) and generalized linear mixed models (GLMM), treating species identity and microsite (site and plot) as random effects. The five shade-tolerant study species all experienced good establishment with relatively high survival and growth rates. The neighbor treatment consistently affected seedling performance, but the effect was always very small, both in absolute terms and relative to the much stronger species and microsite effects. Seedlings with a conspecific neighbor consistently performed worse than seedlings with a heterospecific neighbor, but having no neighbor generally did not cause superior performance relative to the other treatments. We conclude that direct competitive interactions are relatively unimportant among understory plants in humid tropical forests. [ABSTRACT FROM AUTHOR]