Boreal forests are characterized by spatially heterogeneous soils with low N availability. The decomposition of coniferous litter in these systems is primarily performed by basidiomycete fungi, which often form large mycelia with a well-developed capacity to reallocate resources spatially- an advantageous trait in heterogeneous environments. In axenic microcosm systems we tested whether fungi increase their biomass production by reallocating N between Pinus sylvestris (Scots pine) needles at different stages of decomposition. We estimated fungal biomass production by analysing the accumulation of the fungal cell wall compound chitin. Monospecific systems were compared with systems with interspecific interactions. We found that the fungi reallocated assimilated N and mycelial growth away from well-degraded litter towards fresh litter components. This redistribution was accompanied by reduced decomposition of older litter. Interconnection of substrates increased over-all fungal C use efficiency (i.e. the allocation of assimilated C to biomass rather than respiration), presumably by enabling fungal translocation of growth-limiting N to litter with higher C quality. Fungal connection between different substrates also restricted N-mineralization and production of dissolved organic N, suggesting that litter saprotrophs in boreal forest ecosystems primarily act to redistribute rather than release N. This spatial integration of different resource qualities was hindered by interspecific interactions, in which litters of contrasting quality were colonised by two different basidiomycete species. The experiments provide a detailed picture of how resource reallocation in two decomposer fungi leads to a more efficient utilisation of spatially separated resources under N-limitation. From an ecosystem point of view, such economic fungal behaviour could potentially contribute to organic matter accumulation in the litter layers of boreal forests.