The most common and most likely answer to this crossword clue is the 7 letter word CONTEST
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More clues leading to the result CONTEST
Buddy explains!

The straight part
We know that "Challenge" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case challenge = contest.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does CONTEST mean?
CONTEST noun- Controversy; debate.
- Struggle for superiority; combat.
- A competition.
- To contend.
- To call into question; to oppose.
- To strive earnestly to hold or maintain; to struggle to defend.
- To make a subject of litigation; to defend, as a suit; to dispute or resist, as a claim, by course of law.