Spatial clustering is thought to favour the evolution of cooperation because it puts cooperators in a position to help each other. However, clustering also increases competition. The fate of cooperation may depend on how much cooperators cluster relative to defectors, but these clustering differences have not been the focus of previous models and experiments. By competing siderophore-producing cooperator and defector strains of the opportunistic pathogen Pseudomonas aeruginosa in experimental microhabitats, we found that at the spatial scale of individual interactions, cooperator clustering lowers cooperation, but defector clustering favours cooperation. A theoretical model and individual-based simulations show these counterintuitive effects can arise when competition and cooperation occur at a single resource-determined scale, with population dynamics crucially allowing cooperators and defectors to cluster differently. The results suggest that cooperation relies on the regulation of sufficient defector clustering relative to cooperator clustering, which may be important in bacteria, social amoeba, and cancer inhibition.