Interference competition is thought to stabilize consumer-resource systems. The magnitude of interference is linked to that of attack efficiency: when both levels are intermediate, populations are maximally stable and have high competitive ability. Individual variation can affect ecological dynamics through its effect on attack efficiency and handling time. Because interference has a non-linear effect on consumer foraging rates, individual variation in mutual interference can strongly affect ecological dynamics. Here, we explicitly incorporate individual variation in attack efficiency, handling time and interference into a dynamic consumer-resource model and show that variation increases species coexistence by depressing attack efficiency to a greater extent than predator interference. We argue that this differential effect of variation affects the equilibrium densities of consumers and their prey, thus altering their competitive ability. Intermediate levels of variation can maximize both consumer persistence and competitive ability. Our results show the importance of quantifying individual variation in natural populations for understanding the persistence and stability of species within communities.