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Abstract Microbial gene loss is hypothesized to be beneficial when gene function is costly, and the gene product can be replaced via cross-feeding from a neighbor. However, cross-fed metabolites are often only available at low concentrations, limiting the growth rates of gene-loss mutants that are dependent on those metabolites. Here we define conditions that support a loss of function mutant in a three-member bacterial community of (i) N2-utilizing Rhodopseudomonas palustris as an NH4+-excreting producer, (ii) N2-utilizing Vibrio natriegens as the ancestor, and (iii) a V. natriegens N2-utilizaton mutant that is dependent on the producer for NH4+. Using experimental and simulated cocultures, we found that the ancestor outcompeted the mutant due to low NH4+ availability under uniform conditions where both V. natriegens strains had equal access to nutrients. However, spatial structuring that increasingly segregated the mutant from the ancestor, while maintaining access to NH4+ from the producer, allowed the mutant to avoid extinction. Counter to predictions, mutant enrichment under spatially structured conditions did not require a growth rate advantage from gene loss and the mutant coexisted with its ancestor. Thus, cross-feeding can originate from loss-of-function mutations that are otherwise detrimental, provided that the mutant can segregate from a competitive ancestor.