Cell competition employs comparisons of fitness to selectively eliminate cells sensed as less healthy. In Drosophila, apoptotic elimination of the weaker “loser” cells from growing wing discs is induced by a signaling module consisting of the Toll ligand Spätzle (Spz), several Toll-related receptors, and NF-κB factors. How this module is activated and restricted to competing disc cells is unknown. Here, we use Myc-induced cell competition to demonstrate that loser cell elimination requires local wing disc synthesis of Spz. We identify Spz processing enzyme (SPE) and modular serine protease (ModSP) as activators of Spz-regulated competitive signaling and show that “winner” cells trigger elimination of nearby WT cells by boosting SPE production. Moreover, Spz requires both Toll and Toll-8 to induce apoptosis of wing disc cells. Thus, during cell competition, Spz-mediated signaling is strictly confined to the imaginal disc, allowing errors in tissue fitness to be corrected without compromising organismal physiology. Display omitted •In Myc super-competition, Spz signals via Toll and Toll-8 to kill loser cells•Spz is activated for competitive signaling by the proteases SPE and ModSP•Regulation of protease production and receptor expression by Myc allows “cheating”•Wing disc-restricted Spz keeps competitive signaling isolated from immune tissues Low levels of the Toll ligand Spätzle and its activating proteases are synthesized continuously by wing disc cells, but signaling is unproductive. Alpar et al. show that Myc super-competitor cells boost production of the proteases, thereby triggering Spätzle activation and inducing a killing signal that selectively eliminates nearby wild-type cells.