The dilution method is the principal tool used to infer in situ microzooplankton grazing rates. However, grazing is the only mortality process considered in the theoretical model underlying the interpretation of dilution method experiments. Here we evaluate the robustness of mortality estimates inferred from dilution experiments when there is concurrent niche competition amongst phytoplankton. Using a combination of mathematical analysis and numerical simulations, we find that grazing rates may be overestimated-the degree of overestimation is related to the importance of niche competition relative to microzooplankton grazing. In response, we propose a conceptual method to disentangle the effects of niche competition and grazing by diluting out microzooplankton, but not phytoplankton. Our theoretical results suggest this revised "Z-dilution" method can robustly infer grazing mortality, regardless of the dominant phytoplankton mortality driver in our system. Further, we show it is possible to independently estimate both grazing mortality and niche competition if the classical and Z-dilution methods can be used in tandem. We discuss the significance of these results for quantifying phytoplankton mortality rates; and the feasibility of implementing the Z-dilution method in practice, whether in model systems or in complex communities with overlap in the size distributions of phytoplankton and microzooplankton.