The Antarctic fur seal (Arctocephalus gazella) and macaroni penguin (Eudyptes chrysolophus) are sympatric top predators that occur in the Southern Ocean around South Georgia where they are, respectively, the main mammal and bird consumers of Antarctic krill (Euphausia superba). In recent years the population of fur seals has increased, whereas that of macaroni penguins has declined. Both species feed on krill of similar size ranges, dive to similar depths and are restricted in their foraging range at least while provisioning their offspring. In this study we test the hypothesis that the increased fur seal population at South Georgia may have resulted in greater competition for the prey of macaroni penguins, leading to the decline in their population. We used: (1) satellite-tracking data to investigate the spatial separation of the Bird Island populations of these two species whilst at sea during the breeding seasons of 1999 and 2000 and (2) diet data to assess potential changes in their trophic niches between 1989 and 2000. Foraging ranges of the two species showed considerable overlap in both years, but the concentrations of foraging activity were significantly segregated spatially. The size of krill taken by both species was very similar, but over the last 12 years the prevalence of krill in their diets has diverged, with nowadays less krill in the diet of macaroni penguins than in that of Antarctic fur seals. Despite a significant degree of segregation in spatial resource use by the study populations, it is likely that the South Georgia populations of Antarctic fur seal and macaroni penguin exploit the same krill population during their breeding season. For explaining the opposing population trends of the two species, the relative contributions of independent differential response to interannual variation in krill availability and of interspecies competition cannot be resolved with available evidence. The likely competitive advantage of Antarctic fur seals will be enhanced as their population continues to increase, particularly in years of krill scarcity.