Phenotypic plasticity in response to competition is a well-described phenomenon in higher organisms. Here, we show that also bacteria have the ability to sense the presence of competitors and mount fine-tuned responses to match prevailing levels of competition. In our experiments, we studied inter-specific competition for iron between the bacterium Pseudomonas aeruginosa (PA) and its competitor Burkholderia cenocepacia (BC). We focused on the ability of PA to phenotypically adjust the production of pyoverdine, an iron-scavenging siderophore. We found that PA up-regulates pyoverdine production early on during competition under condition of low iron availability. This plastic upregulation was fine-tuned in response to the level of competition imposed by BC, and seems to confer a relative fitness benefit to PA in the form of an earlier initiation of growth. At later time points, however, PA showed reduced growth in mixed compared to monoculture, suggesting that competitive responses are costly. Altogether, our results demonstrate that phenotypic plasticity in siderophore production plays an important role in inter-specific competition for iron. Upregulating siderophore production may be a powerful strategy to lock iron away from competing species, and to reserve this nutrient for strain members possessing the compatible receptor for uptake.