Defense costs provide a major explanation for why plants in nature have not evolved to be better defended against pathogens and herbivores; however, evidence for defense costs is often lacking. Plants defend by deploying resistance traits that reduce damage, and tolerance traits that reduce the fitness effects of damage. We first tested the defense-stress cost (DSC) hypothesis that costs of defenses increase and become important under competitive stress. In a greenhouse experiment, uniparental maternal families of the host plant Arabis perennans were grown in the presence and absence of the bunch grass Bouteloua gracilis and the herbivore Plutella xylostella. Costs of resistance and tolerance manifest as reduced growth in the absence of herbivory were significant when A. perennans grew alone, but not in the competitive environment, in contrast to the DSC hypothesis. We then tested the defense-stress benefit (DSB) hypothesis that plant defenses may benefit plants in competitive situations thereby reducing net costs. For example, chemical resistance agents and tolerance may also have functions in competitive interactions. To test the DSB hypothesis, we compared differentially competitive populations for defense costs, assuming that poorer competitors from less dense habitats were less likely to have evolved defenses that also function in competition. Without competitive benefits of defenses, poorer competitors were expected to have higher net costs of defenses under competition in accordance with DSB. Populations of A. perennans and A. drummondii that differed dramatically in competitiveness were compared for costs, and as the DSB hypothesis predicts, only the poor competitor population showed costs of resistance under competition. However, cost of tolerance under competition did not differ among populations, suggesting that the poor competitors might have evolved a general stress tolerance. Although the DSC hypothesis may explain cases where defense costs increase under stress, the DSB hypothesis may explain some cases where costs decrease under competitive stress.