Competition is a key factor driving forest dynamics and stand structure during the course of stand development. Although the role of neighbourhood competition on stand dynamics has received increasing attention, the response of competition to environmental fluctuations and stand development remains poorly explored. We evaluated changes in competition during stand development in a dry-edge Scots pine relict population located in Central Spain. Typically, tree-to-tree interactions have been investigated through static competition measurements, which usually lack the temporal variation associated to natural forest development and environmental conditions. Here, we assessed how individual and neighbourhood components of competition evolved along a 35-year period, and we related competition dynamics to population structure and drought levels. On six plots, 508 trees were mapped and diameters at breast height (DBH) were measured. Two increment cores were taken from target trees to derive basal area increment (BAI), and neighbourhood was reconstructed back to 1980. Results provide insights into inter-annual variability in competition effects and their role on tree radial growth depending on climatic conditions. From the year 2005 onwards, both individual and neighbourhood components of competition showed a decoupled pattern over time. This effect was particularly pronounced during the extreme drought in 2012, in which the individual component decreased, whereas the neighbourhood component increased. In addition, climatic variability modulated the competition effects during stand development. This approach of evaluating competition dynamics proves to be promising for studying forest stand development and the influence of climate impacts on tree populations subjected to xeric conditions.