Accurately assessing the risks of toxins in polluted ecosystems and finding factors that determine population persistence and extirpation are important from both environmental and conservation perspectives. In this paper, we develop and study a toxin-mediated competition model for three species that live in the same polluted aquatic environment and compete for the same resources. Analytical analysis of positive invariance, existence and stability of equilibria, sensitivity of equilibria to toxin are presented. Bifurcation analysis is used to understand how the environmental toxins, plus distinct vulnerabilities of three species to toxins, affect the competition outcomes. Our results reveal that while high concentrations lead to extirpation of all species, sublethal levels of toxins affect competition outcomes in many counterintuitive ways, which include boosting coexistence of species by reducing the abundance of the predominant species, inducing many different types of bistability and even tristability, generating and reducing population oscillations, and exchanging roles of winner and loser in competition. The findings in this work provide a sound theoretical foundation for understanding and assessing population or community effects of toxicity.