Climate variability can exert a powerful impact on biotic competition, but past studies have focused largely on short-lived species, with a lack of attention to long-lived species such as trees. Therefore, there is a need to evaluate how competition regulates the climate-growth relationship in mature trees. We sampled the dominant tree species, Picea wilsonii Mast., on Xinglong Mountain, China, and studied the above issues by analyzing the relationship between tree radial growth, precipitation, and competition. In relatively wet years (precipitation > average), there was no significant difference in climate sensitivity between different competition classes. However, trees suffering from highly competitive stress were more sensitive to climate variability in all years, and particularly in the subset of years that was relatively drought (precipitation < average). These results suggest that competition enhances its ability to regulate tree growth response to climate variability in adverse weather conditions. Competition for resources between trees was asymmetrical, and an increase in height could give trees a disproportionate benefit. Thus, at trunk-level, both basal area incremental growth and intrinsic water-use efficiency of trees subjected to low competitive stress were significantly higher than trees that are subjected to highly competitive stress. Although the intrinsic water-use efficiency of trees under highly competitive stress increased more rapidly as the drought level increases, this did not change the fact that the radial growth of them declined more. Our research is valuable for the development of individual-tree growth models and advances our understanding for forest management under global climate change.