Trade–offs between defence and other fitness components are expected in principle, and can have major qualitative impacts on ecological dynamics. Here we show that such a trade–off exists even in the simple unicellular alga Chlorella vulgaris. We grew algal populations for multiple generations in either the presence (‘grazed algae’) or absence (‘non–grazed algae’) of the grazing rotifer Brachionus calyciflorus, and then evaluated their defence and competitive abilities. Grazed algae were better defended, yielding rotifer growth rate 32% below that of animals fed non–grazed algae, but they also had diminished competitive ability, with a growth rate under nutrient–limiting conditions 28% below that of non–grazed algae. Grazed algae also had a smaller cell size and were more concentrated in carbon and nitrogen. Thus, C. vulgaris genotypes vary phenotypically in their position along a trade–off curve between defence against grazing and competitive ability. This genetic variation underlies rapid algal evolution that significantly alters the ecological predator–prey cycles between rotifers and algae.