Climate warming is favoring the expansion of non-native species onto the Arctic tundra, where they may compete over resources with native species. In the harsh tundra conditions, sympatric red foxes (Vulpes vulpes) and Arctic foxes (Vulpes lagopus) may compete over denning sites, which are important for their reproduction and survival. We studied den selection by red and Arctic foxes in spring and summer and their possible competition over this resource in an ecotone near Churchill, Manitoba, on the west coast of Hudson Bay, by examining patterns of den occupancy related to den characteristics and spacing patterns between neighbors. Based on 11 years of occupancy data for 42 tundra dens, we determined that red and Arctic foxes favored dens based on shelter quality in both spring and summer, rather than proximity of specific habitats (and thus specific prey). Mechanisms of den selection differed between species, which may promote coexistence, and areas of high den density were avoided by red foxes and preferred by Arctic foxes. We did not find evidence of exclusion of Arctic foxes by red foxes: spacing patterns showed that foxes spaced themselves based on their need for space, territoriality and food availability but not interference. In the current abiotic Arctic conditions, taiga species settling on the tundra could coexist with tundra endemics, at given density thresholds of both competitors. As Arctic conditions may become milder, an increase in newcomer abundance could disrupt the current balance that favors species coexistence.