Abstract Although competition is a common feature of digital games, nuances of when and why aspects of competition influence players' motivation and well-being have been surprisingly underexplored, especially through the lens of self-determination theory (SDT). In this critical review, we: (1) describe how a mini-theory of SDT, cognitive evaluation theory (CET), can help predict when and why aspects of competition will alternatively satisfy or frustrate basic psychological needs in digital games with downstream effects on players' motivation and well-being; (2) apply the Motivation, Engagement and Thriving in User Experience (METUX) model to outline ways competition in digital games can influence motivation and well-being at multiple levels; and (3) prioritize future research directions. Finally, we argue that digital games, given their diversity, adaptability and massive reach, represent an especially powerful context for studying competition, motivation and well-being. Research Highlights This critical review integrates self-determination theory (SDT)-guided models and research related to HCI, sports psychology and well-being supportive design to advance understanding of competition in digital games. Introduces a new taxonomy of competition relevant to SDT and digital games, including macro-level categories, general elements and specific features. Presents a competition and digital gaming specific cognitive evaluation theory (CET) model linking different aspects of competition in digital games to basic psychological need satisfaction and frustration, motivation, health and well-being. Applying the METUX model, we map out ways researchers and game makers can think about aspects of competition in digital games at multiple levels or spheres of influence. Prioritizes future directions for research, specifically related to experimentally manipulating digital feedback and digital representations of self and others in digital games.