Predators play a key role in shaping natural ecosystems, and understanding the factors that influence a predator's kill rate is central to predicting predator-prey dynamics. While prey density has a well-established effect on predation, it is increasingly apparent that predator density also can critically influence predator kill rates. The effects of both prey and predator density on the functional response will, however, be determined in part by their distribution on the landscape. To examine this complex relationship we experimentally manipulated prey density, predator density, and prey distribution using a tadpole (prey)-dragonfly nymph (predator) system. Predation was strongly ratio-dependent irrespective of prey distribution, but the shape of the functional response changed from hyperbolic to sigmoidal when prey were clumped in space. This sigmoidal functional response reflected a relatively strong negative effect of predator interference on kill rates at low prey: predator ratios when prey were clumped. Prey aggregation also appeared to promote stabilizing density-dependent intraguild predation in our system. We conclude that systems with highly antagonistic predators and patchily distributed prey are more likely to experience stable dynamics, and that our understanding of the functional response will be improved by research that examines directly the mechanisms generating interference.