The competition-relatedness hypothesis (CRH) predicts that the strength of competition is the strongest among closely related species and decreases as species become less related. This hypothesis is based on the assumption that common ancestry causes close relatives to share biological traits that lead to greater ecological similarity. Although intuitively appealing, the extent to which phylogeny can predict competition and co-occurrence among species has only recently been rigorously tested, with mixed results. When studies have failed to support the CRH, critics have pointed out at least three limitations: (i) the use of data poor phylogenies that provide inaccurate estimates of species relatedness, (ii) the use of inappropriate statistical models that fail to detect relationships between relatedness and species interactions amidst nonlinearities and heteroskedastic variances, and (iii) overly simplified laboratory conditions that fail to allow eco-evolutionary relationships to emerge. Here, we address these limitations and find they do not explain why evolutionary relatedness fails to predict the strength of species interactions or probabilities of coexistence among freshwater green algae. First, we construct a new data-rich, transcriptome-based phylogeny of common freshwater green algae that are commonly cultured and used for laboratory experiments. Using this new phylogeny, we re-analyse ecological data from three previously published laboratory experiments. After accounting for the possibility of nonlinearities and heterogeneity of variances across levels of relatedness, we find no relationship between phylogenetic distance and ecological traits. In addition, we show that communities of North American green algae are randomly composed with respect to their evolutionary relationships in 99% of 1077 lakes spanning the continental United States. Together, these analyses result in one of the most comprehensive case studies of how evolutionary history influences species interactions and community assembly in both natural and experimental systems. Our results challenge the generality of the CRH and suggest it may be time to re-evaluate the validity and assumptions of this hypothesis.