This article investigates how the degree of electoral competition affects parties’ policy positions. It follows a growing body of research on party positioning in multiparty competition that regards elections as signals for parties that have to choose their positions and issue strategies. In this article we argue that previous elections provide information about the competitiveness of the upcoming election. The expected degree of electoral competition affects parties’ future policy positions since with increasing competitiveness of an election, parties have higher incentives to move toward a vote-maximizing position. However, what constitutes a vote-maximizing strategy varies between parties. While large mainstream parties have an incentive to moderate their positions, small and niche parties choose more extreme positions to distinguish themselves from their mainstream competitors. Applying a novel measure of electoral competitiveness, we find that the degree of electoral competition indeed determines parties’ policy shifts, but that this effect is moderated by party size.