Jarrod Evans and Rhys Patchell face what is effectively a winner-takes-all World Cup duel in Saturday's clash against Ireland.
Evans will start the tournament warm-up game in Cardiff, with fellow fly-half Patchell then featuring off the bench.
Asked if Evans and Patchell were in direct competition, Gatland said: "Probably, yes.
"Jarrod gets an opportunity. We know a little bit more about Rhys Patchell, so the pressure is on him (Evans), and he understands that fully.
"It's about coming out, starting a game and controlling a game. Rhys will get the second half, and it's about him coming on and making an impression.
"The two of them are pretty aware that they will get the chance on Saturday, and it's probably a shoot-out between the two of them."
Gatland names his 31-man World Cup squad on Sunday, and he added: "There are a number of positions still up for grabs – front-row, second-row, back-row, back-three, the 10 position.
"The players are pretty well aware of how important this game is, and the opportunity they get to put their hands up for selection on Sunday."
Cardiff Blues wing Owen Lane and Saracens prop Rhys Carre will make their Wales debuts at the Principality Stadium.
Gatland has made 14 changes from the starting line-up on duty against England 12 days ago, with Blues back-row forward Josh Navidi captaining Wales for the first time.
Lane and Carre apart, there are also opportunities for the likes of full-back Hallam Amos, centre Scott Williams and hooker Ryan Elias.
Lane and Amos could effectively be battling it out for one back-three spot, while 21-year-old Carre has an opportunity to show the form that drove Premiership and European champions Saracens to sign him from the Blues earlier this year.
"It was a bit of a shock to them (Lane and Carre) when they first came in with regards to how hard we train, but they have fitted in well," Gatland said.
"Rhys has lost about 10 kilograms since he's been with us! Owen Lane has continued to improve and impress, and both of them have fitted in well and hopefully they make the most of their opportunity."
Victory over an Ireland side that were thrashed 57-15 by England last time out would give Wales a 12th successive home win. They have not lost in Cardiff since November 2017.
"I am excited about the game," Gatland added. "They (Ireland) are under pressure after last week's performance (against England), so it's a great challenge for us.
"They are coming here knowing they've been criticised. They will be hurting from last week.
"There could also be players involved who played in the Six Nations game (Wales beat Ireland in March to win the Grand Slam) and they will be hurting from that as well.
"I couldn't ask for a better game for this group of players to have to go out there and perform."
For Gatland, it will be his final home game as Wales boss before he steps down after the World Cup.
"It will be quite emotional," he said. "I've had an unbelievable time here in Wales, the people have made my time incredibly special.
"I'm trying to keep it in perspective. It's something I will be thinking about, but it's not about me.
"There are 31 players getting selected on Sunday, and I have to make sure the performance and the job of picking the squad is incredibly important.
"There's no way that I want to overshadow what is probably more important for those individuals than me having my last game in the stadium.
"I will just have a personal reflection and look back on how memorable it's been without making a big fuss about it."