ABSTRACT We study the spatially resolved (sub-kpc) gas velocity dispersion (σ)–star formation rate (SFR) relation in the FIRE-2 (Feedback in Realistic Environments) cosmological simulations. We specifically focus on Milky Way-mass disc galaxies at late times (z ≈ 0). In agreement with observations, we find a relatively flat relationship, with σ ≈ 15–30 km s−1 in neutral gas across 3 dex in SFRs. We show that higher dense gas fractions (ratios of dense gas to neutral gas) and SFRs are correlated at constant σ. Similarly, lower gas fractions (ratios of gas to stellar mass) are correlated with higher σ at constant SFR. The limits of the σ–ΣSFR relation correspond to the onset of strong outflows. We see evidence of ‘on-off’ cycles of star formation in the simulations, corresponding to feedback injection time-scales of 10–100 Myr, where SFRs oscillate about equilibrium SFR predictions. Finally, SFRs and velocity dispersions in the simulations agree well with feedback-regulated and marginally stable gas disc (Toomre’s Q = 1) model predictions, and the simulation data effectively rule out models assuming that gas turns into stars at (low) constant efficiency (i.e. 1 per cent per free-fall time). And although the simulation data do not entirely exclude gas accretion/gravitationally powered turbulence as a driver of σ, it appears to be subdominant to stellar feedback in the simulated galaxy discs at z ≈ 0.