Abstract: Species coexistence attracts wide interest in ecology. Modern coexistence theory (MCT) identifies coexistence mechanisms, one of which, the storage effect, hinges on relationships between fluctuations in environmental and competitive pressures. However, such relationships are typically measured using covariance, which does not account for the possibility that environment and competition may be more related to each other when they are strong than when weak, or vice versa. Recent work showed that such ‘asymmetric tail associations’ (ATAs) are common between ecological variables, and are important for extinction risk, ecosystem stability, and other phenomena. To our knowledge, the implications of ATAs for competition and coexistence have not previously been investigated; doing so is the overarching goal of our study. We produced a formal mathematical extension of MCT that quantifies the influence of ATAs on species coexistence. Building upon a recent, simulation-based approach to MCT, we decomposed the storage effect into two new mechanisms, accounting for the contribution of ATAs to coexistence, and the contribution of purely symmetric, correlative environment-competition relationships to coexistence. Application of our decomposition to a simple two-species lottery model and an empirical example using a laboratory system of competing diatoms, illustrate that ATA influences can often be comparable in magnitude to other mechanisms of coexistence and ATAs can make the difference between species coexistence and competitive exclusion. Our results highlight that common metrics of association fail to include important information on the structure of relationships between variables. ATA influences are an important new mechanism of coexistence.