Habitat selection theory enables inferences about species habitat choice across a range of observed population densities. However, it is relatively uncommon to use habitat selection theory in studies of habitat restoration efficacy to understand the effect of restoration on habitat competition. We combined observational density data and resource selection functions to analyze habitat correlations with both habitat selection theory and a mark-recapture experiment to show how habitat restoration can mitigate competition between species with similar habitat preferences. To restore degraded and channelized riverine habitat for juvenile Chinook salmon (Oncorhynchus tshawytscha) and steelhead trout (Oncorhynchus mykiss) engineered log jams (ELJs) have been installed to create pools to enhance growth and rearing. Application of habitat selection theory first showed that both species share a preference for ELJ-treated habitat over unrestored habitat. Linear models showed that steelhead are generalists with respect to depth in unrestored habitat, whereas both species' abundance varies along a depth gradient in ELJ-treated habitat. Selective versus opportunistic use of deep and shallow ELJ pools was density-dependent. We found a range of densities at which a "ghost of competition" exists, where Chinook are selective on deep ELJ-treated pools and steelhead are selective on shallow pools. A mark-recapture experiment confirmed that steelhead limit Chinook movement into unrestored habitat, but this competitive effect vanished in ELJ-treated habitat where selection occurred with respect to pool depth. The experiment, combined with theory, enabled (1) the identification of a mechanism allowing for shared preference of restored habitat and (2) the description of how restoration can mitigate competition.