A study of the insect community inhabiting the wood-decaying bracket fungus, Cryptoporus volvatus was used to test two hypotheses proposed to account for the competitive coexistence of species in insect communities in patchy environments, niche partitioning and spatial mechanisms. A total of 8990 individuals belonging to 17 insect species emerged from 438 sporocarps (patches) collected from the field. Insect species richness increased and then declined with increase in the total insect biomass reared from a sporocarp, suggesting the potential importance of interspecific competition. Successional niche partitioning explained the spatial distribution of the four specialist species. The aggregation model of coexistence satisfactorily explained the stable coexistence of the species. The specialist species displayed higher population persistence than the generalists. Simulation studies suggest that restricted movements of adults could override patch-level larval aggregation. The effect of such restricted movements on stabilizing coexistence in fungus-insect communities has not been previously appreciated. These findings suggest that spatial mechanisms play a crucial role in the competitive coexistence of the species in the mycophagous insect communities inhabiting bracket fungi.