Children’s motor competence (MC) has declined in the past decades, while sedentary behavior (SB) has increased. This study examined the association between MC and physical activity (PA) levels among primary schoolchildren. Demographics, body height and weight, MC (Athletic Skills Track), and PA levels (ActiGraph, GT3X+) were assessed among 595 children (291 boys, mean age = 9.1 years, SD = 1.1). MC was standardized into five categories: from very low to very high. PA levels were classified into SB, light PA (LPA), and moderate-to-vigorous PA (MVPA). Mixed-model analyses were conducted with PA levels as dependent variables and MC as the independent variable, while adjusting for age, gender, and body mass index (BMI) z-score on the individual level. A negative association between MC and SB and a positive association between MC and MVPA were found. The strength of both associations increased as children expressed lower or higher levels of MC. MC is an important correlate of both SB and MVPA, particularly for children with very high or low MC. Developing and improving children’s MC may contribute to spending less time in SB and more time in MVPA, particularly for high-risk groups, i.e., children with low MC. Moreover, addressing MC development and PA promotion simultaneously might create positive feedback loops for both children’s MC and PA levels.