The Streptococcus pneumoniae ComDE two-component signaling system controls the development of genetic competence in the bacterium and affects virulence in models of pneumonia and bacteremia. We have investigated the impact of the competence pathway during colonization of the nasopharynx, the principal ecological niche of the pneumococcus. Previous work showed that deletion of the pneumococcal CiaRH signaling system inhibited colonization and increased expression of genes required for competence. We anticipated that signaling by the competence pathway might similarly reduce carriage. Consistent with this expectation, a comE deletion that blocked transformation increased colonization fitness such that the mutant outcompeted the wild type in an infant rat model of asymptomatic carriage. Deletion of comD-immediately upstream of comE and likewise required for competence-similarly increased colonization fitness if the orientation of the antibiotic resistance cassette inserted into the comD locus was such that it reduced transcription of comE. However, an alternative comD deletion mutation that caused an increase in comE transcription impaired colonization instead. Activation of the competence system through a comE(D143Y) mutation did not affect colonization, but an inability to secrete the competence-stimulating peptide due to deletion of comAB produced a density-dependent reduction in colonization fitness. These results suggest a model in which signaling by the unactivated form of ComE reduces colonization fitness compared to that of bacteria in which it is either activated or absent entirely, with the most substantial fitness gain accompanying deletion of comE. This observation demonstrates that the pneumococcus incurs a substantial fitness cost in order to retain a functional competence regulatory system.