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Intraspecific trait variation (ITV) is a widespread feature of life, but it is an open question how ITV affects between‐species coexistence. Recent theoretical studies have produced contradictory results, with ITV promoting coexistence in some models and undermining coexistence in others. Here we review recent work and propose a new conceptual framework to explain how ITV affects coexistence between two species. We propose that all traits belong to one of two categories: niche traits and hierarchical traits. Niche traits determine an individual's location on a niche axis or trade‐off axis, such that changing an individual's trait makes it perform better in some circumstances and worse in others. Hierarchical traits represent cases where conspecifics with different traits have the same niche, but one performs better under all circumstances, such that there are winners and losers. Our framework makes predictions for how intraspecific variation in each type of trait affects coexistence by altering stabilizing mechanisms and fitness differences. For example, ITV in niche traits generally weakens the stabilizing mechanism, except when it generates a generalist–specialist trade‐off. On the other hand, hierarchical traits tend to impact competitors differently, such that ITV in one species will strengthen the stabilizing mechanism while ITV in the other species will weaken the mechanism. We re‐examine 10 studies on ITV and coexistence, along with four novel models, and show that our framework can explain why ITV promotes coexistence in some models and undermines coexistence in others. Overall, our framework reconciles what were previously considered to be contrasting results and provides both theoretical and empirical directions to study the effect of ITV on species coexistence.