Both benign and harsh environments promote the evolution of sociality. This paradox-societies occur in environments of such contrasting quality-may be explained by the different types of benefits that individuals receive from grouping: resource defense benefits that derive from group-defended critical resources versus collective action benefits that result from social cooperation among group members. Here, we investigate cooperative behavior in the burying beetle Nicrophorus nepalensis along an elevational gradient where environmental quality (climate and competition) varies with altitude. We show that climate (temperature) and competition (both intra- and interspecific) independently and synergistically influence sociality via different grouping benefits that vary along the gradient. At low elevations where interspecific competition for resources is intense, groups gain from the collective action benefit of increased interspecific competitive ability. In contrast, pairs have higher fitness at intermediate elevations where intraspecific competition for resources is greatest because resource defense is the key grouping benefit. However, groups and pairs have similar fitness at high elevations, suggesting that there is no grouping benefit in such physiologically challenging environments. Our results demonstrate that sociality is favored for different reasons under a range of environmental conditions, perhaps explaining why animal societies occur in environments of such contrasting quality.