The isthmi pars magnocellularis (Imc), a group of inhibitory neurons in the vertebrate midbrain tegmentum, orchestrates stimulus competition and spatial selection in the optic tectum (OT). Here, we investigate the properties of relative-strength dependent competitive interactions within the barn owl Imc. Imc neurons exhibit switch-like as well as gradual response profiles as a function of relative stimulus strength, do so for competing stimuli both within and across sensory modalities, and signal the strongest stimulus in a dynamically flexible manner. Notably, Imc signals the strongest stimulus more categorically (with greater precision), and earlier than the OT. Paired recordings at spatially aligned Imc and OT sites reveal that although some properties of stimulus competition are correlated, others are set independently. Our results demonstrate that the Imc is itself an active site of competition, and may be the first site in the midbrain selection network at which stimulus competition is resolved.