Signal transduction requires the coordination of activities between different pathways. In mammalian cells, Raf-1 regulates the MST-LATS and MEK-ERK pathways. We found that a complex circuitry of competing protein interactions coordinates the crosstalk between the ERK and MST pathways. Combining mathematical modelling and experimental validation we show that competing protein interactions can cause steep signalling switches through phosphorylation-induced changes in binding affinities. These include Akt phosphorylation of MST2 and a feedback phosphorylation of Raf-1 Ser 259 by LATS1, which enables Raf-1 to suppress both MST2 and MEK signalling. Mutation of Raf-1 Ser 259 stimulates both pathways, simultaneously driving apoptosis and proliferation, whereas concomitant MST2 downregulation switches signalling to cell proliferation, transformation and survival. Thus, competing protein interactions provide a versatile regulatory mechanism for signal distribution through the dynamic integration of graded signals into switch-like responses.