Cooperation between unrelated organisms is thought to be difficult to maintain because of the potential for exploiters to invade. Wild populations of rhizobia exhibit a range of life-history strategies from highly mutualistic nitrogen fixers to parasitic non-fixing forms. The coexistence of these strains suggests that the ineffective strains are cheaters, since rhizobia inside root nodules fix atmospheric nitrogen at the expense of energy storage that could be directed toward survival. Although host plants can sanction ineffective nodules, they may not be able to discriminate between strains in mixed-infection nodules, which may thus provide a haven for non-fixing strains. The ecological basis of fitness conflicts that underlie cheating ultimately results from resource allocation decisions, a central theme of life-history evolution. We construct an evolutionary model of rhizobia nitrogen-fixing strategy based on a survival reproduction trade-off and find situations where the population becomes polymorphic through adaptive diversification. Our model predicts that gradual evolution towards the coexistence of fixers and complete non-fixers is not possible. Instead, both coexisting strains will fix an appreciable amount of nitrogen. This is because the same life-history trade-off that affords the opportunity for cheating simultaneously constrains this behavior. We conclude that such a survival-reproduction tradeoff could be responsible for the origin of only some pairs of coexisting strategies. More generally, our model predicts that a survival-reproduction tradeoff could be responsible for the origin of variation in life-history strategies in other organisms.