Inclusive fitness theory predicts that individuals can increase their indirect fitness by grouping with kin. However, kin-grouping also increases competition between kin, which potentially outweighs its benefits. The level of kin-competition is contingent on environmental conditions and thus highly variable. Hence, individuals should benefit from plastically adjusting kin-discrimination according to the expected level of kin competition. Here, we investigate whether perceived high competition affects juvenile kin-shoaling preferences in the cichlid Pelvicachromis taeniatus. Juveniles were given the choice between two shoals consisting of either kin or non-kin. Levels of perceived competition were manipulated through food limitation in the face of the differential energy expenditure of differently sized fish. The preference to shoal with kin decreased with increasing levels of perceived competition; small food-deprived individuals avoided kin. Shoaling with kin under strong competition may reduce individual indirect fitness. Hence, individuals can likely improve their inclusive fitness by plastically adjusting their kin-grouping preferences.