Can't send email to users in my domain

When I try to send an email from user1@mydomain.com to user2@mydomain.com I get the following error in /var/log/maillog:

Code:
postfix/lmtp[62062]: 89306945: to=<user1@mydomain.com>, relay=mail.mydomain.com[private/dovecot-lmtp] said: 550 5.1.1 <user1@mydomain.com> User doesn't exist: user1@mydomain.com (in reply to RCPT TO command))

I use virtual users. Sending email to external domains works fine.

Today I changed the way logins work so that I can use "Application Specific Passwords". I changed my password query from:


Code:
password_query = SELECT email as user, password FROM virtual_users WHERE email='%u';

to:

Code:
password_query = SELECT NULL AS password,'Y' as nopassword, username AS user FROM mailserver.dovecot_passwords WHERE username = '%u' AND password=MD5(REPLACE('%w',' ',''))

Logging in works fine but I just can't figure out why I can't send emails to other users for domains that are hosted on my server. Any ideas?

My virtual domains, alises and users are all in a MySQL database.
 
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