: Complex tissue morphology arises from coordinated activity of stem cells during development. However, the quality control mechanisms that act in stem cells during growth to promote tissue fitness are not well understood. Cell competition has been proposed to act as a selection mechanism in rapidly expanding tissues, whereby less fit loser cells are eliminated by neighbouring winner cells. The extent to which cell competition acts as a conserved regulator of tissue and organ growth is unknown. To address this question, we establish a model to study cell competition in the developing skin. Using a unique multidisciplinary strategy, we show that growth is inherently heterogeneous during rapid tissue expansion and remodelling. Less fit loser clones are actively eliminated over time to maximize the fitness of the skin to act as a barrier and repair wounds. Delving into mechanism, we unveil an unexpected transition in cell competition mechanisms as tissue architecture becomes more complex, transitioning from a rapidly proliferating monolayer that eliminates less fit loser cells by apoptosis, to a stratifying tissue that eliminates loser cells by triggering their differentiation. Our data also reveals the physiological relevance of cell competition for skin function; when cell competition is disrupted, barrier formation is delayed. Preliminary transcriptional data further supports the notion that endogenous cell competition is intertwined with the biology of the skin. Altogether, our studies raise the intriguing possibility that cell competition acts as a selective force during epidermal development to optimize tissue fitness. Such growth control mechanisms are likely to be of particular importance for continuously regenerating epithelia such as the mammalian epidermis, which effectively never stop growing.