The mechanisms for the coexistence of multiple species occupying the same ecological niche are often puzzling. Predator effects on competitively superior species is one possible mechanism. In this study, we tested whether the presence of size-selective predators (fishes) acts as a mechanism for the coexistence of two species of case-bearing caddisfly larvae, Perissoneura paradoxa and Psilotreta kisoensis (Odontoceridae, Trichoptera). The larvae of these two species have similar ecological and life history traits except their body size, and they have been found to coexist only in habitats shared with predatory fishes. Experiments on intra and interspecific competition revealed that the larger Pe. paradoxa always outcompeted the smaller Ps. kisoensis in the absence of predatory fishes, suggesting that Pe. paradoxa performed intra-guild predation on Ps. kisoensis. We also conducted experiments to examine how strongly each of these species responded in terms of case repair with/without a predator chemical cue after their cases were partly dismantled. Perissoneura paradoxa exhibited a stronger case repair response in the presence of a predator chemical cue than that exhibited by Ps. kisoensis, suggesting that Pe. paradoxa is more vulnerable to fish predation, probably because their body size is in the preferred prey range of fishes. We suggest that the presence of predators works in the favor of smaller, subordinate species through size-selective predator effects, enabling these two competitive species to coexist in the same habitat.