Ecological theory predicts that interactions between antagonistic ecosystem engineers can lead to local competitive exclusion, but disturbance can facilitate broader coexistence. However, few empirical studies have tested the potential for disturbance to mediate competition between engineers. We examined the capacity for disturbance and habitat modification to explain the disjunct distributions of two benthic ecosystem engineers, eelgrass Zostera marina and the burrowing ghost shrimp Neotrypaea californiensis, in two California estuaries. Sediment sampling in eelgrass and ghost shrimp patches revealed that ghost shrimp change benthic biogeochemistry over small scales (centimeters) but not patch scales (meters to tens of meters), suggesting a limited capacity for sediment modification to explain species distributions. To determine the relative competitive abilities of engineers, we conducted reciprocal transplantations of ghost shrimp and eelgrass. Local ghost shrimp densities declined rapidly following the addition of eelgrass, and transplanted eelgrass expanded laterally into the surrounding ghost shrimp-dominated areas. When transplanted into eelgrass patches, ghost shrimp failed to persist. Ghost shrimp were also displaced from plots with structural mimics of eelgrass rhizomes and roots, suggesting that autogenic habitat modification by eelgrass is an important mechanism determining ghost shrimp distributions. However, ghost shrimp were able to rapidly colonize experimental disturbances to eelgrass patch edges, which are common in shallow estuaries. We conclude that coexistence in this system is maintained by spatiotemporally asynchronous disturbances and a competition-colonization trade-off: eelgrass is a competitively superior ecosystem engineer, but benthic disturbances permit the coexistence of ghost shrimp at the landscape scale by modulating the availability of space.