Competition for nest site resources among sympatric bird species leads to differences in occupying superior resources, which can directly influence their breeding performance. However, how sympatric congeneric bird species alleviate interspecific competition in nest site selection and achieve coexistence remains unclear. Therefore, we conducted a long-term investigation on the nest site selection and breeding performance of two sympatric congeneric species, Scaly-breasted Munia (Lonchura striata) and White-rumped Munia (Lonchura punctulata) in Xishuangbanna, Yunnan Province, southwest China, from 2017 to 2021. Our findings revealed that White-rumped Munia and Scaly-breasted Munia shared overlapped breeding period, but had significant spatial segregation. Regarding the impact of nest site selection on the breeding performance of these two bird species, we found that increasing nest concealment led to higher nestling numbers, fledgling numbers, and breeding success rate. Conversely, greater proximity to nests of heterologous species was correlated with reduced nestling numbers, hatching rates, and breeding success rates. Additionally, nests located in closer proximity to water edges exhibited reduced fledgling numbers, whereas choosing trees with larger diameter at breast height posi­ tively correlated with higher fledgling numbers. Compared to White-rumped Munia, Scaly-breasted Munia were inclined to occupy more concealed nests, tree with larger diameters, and closer to heterologous nests. Therefore, the nestling numbers, the fledgling rate, and the breeding success rate of the Scaly-breasted Munia were significantly higher than those of the White-rumped Munia. This study further showed that the increase of nest concealment and decrease of nearest distance to the nest of heterologous species decreased nest predation rate, therefore, increased the breeding success rate. Our study unveiled that, by spatial segregation and different nest site selection, two sibling bird species with highly overlapped breeding period can achieve coexistence in tropical areas.