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Competition arises when two co-occuring species share a limiting resource. Potential for competition is higher when species have coexisted for a short time, as it is the case for herbivores and livestock introduced in natural systems. Sheep, introduced in the late 19th century in Patagonia, bear a great resemblance in size and diet to the guanaco, the main native herbivore in Patagonia. In such circumstances, it could be expected that the two species compete and one of them could be displaced. We investigated spatial overlap and habitat selection by coexisting sheep and guanaco in winter and in summer. Additionally, we studied habitat selection of the guanaco in a control situation free from sheep, both in summer and winter. We also determined overlap between species in areas with different intensity of use (named preferred and marginal areas) in order to further detect the potential level of competition in the case of overlapping. Guanaco and sheep showed significantly different habitat preferences through all seasons, in spite of their spatial overlap at landscape scale. Additionally, the habitat used by guanaco was similar regardless of the presence or absence of livestock, which further indicates that sheep is not displacing guanaco where they coexist. These results suggest that habitat segregation between guanaco and sheep is due to a differential habitat selection and not to a competitive displacement process. Therefore, the potential for competition is considered low, contrary to what has been previously observed, although this could be a density-dependent result. [ABSTRACT FROM AUTHOR]