AbstractEnvironmental fluctuations can mediate coexistence between competing species via the storage effect. This fluctuation-dependent coexistence mechanism requires three conditions: (i) a positive covariance between environment conditions and the strength of competition, (ii) species-specific environmental responses, and (iii) species are less sensitive to competition in environmentally unfavorable years. In serially uncorrelated environments, condition (i) only occurs if favorable environmental conditions immediately and directly increase the strength of competition. For many demographic parameters, this direct link between favorable years and competition may not exist. Moreover, many environmental variables are temporal autocorrelated, but theory has largely focused on serially uncorrelated environments. To address this gap, a model of competing species in autocorrelated environments is analyzed. This analysis shows that positive autocorrelations in demographic rates that increase fitness (e.g. maximal fecundity or adult survival) produce the positive environment-competition covariance. Hence, when these demographic rates contribute to buffered population growth, positive temporal autocorrelations generate a storage effect, otherwise they destabilize competitive interactions. For negatively autocorrelated environments, this theory highlights an alternative stabilizing mechanism that requires three conditions: (i’) a negative environmental-competition covariance, (ii) species-specific environmental responses, and (iii’) species are less sensitive to competition in more favorable years. When the conditions for either of these stabilizing mechanisms are violated, temporal autocorrelations can generate stochastic priority effects or hasten competitive exclusion. Collectively, these results highlight that temporal autocorrelations in environmental conditions can play a fundamental role in determining ecological outcomes of competing species.