We examined effects of the macroalgae Laurencia and Palisada spp. on epifauna within seagrass beds of Thalassia testudinum. First we conducted a field survey of Thalassia testudinum beds with varying densities of Laurencia and Palisada spp. Second, we conducted a field experiment, manipulating natural and simulated Laurencia and Palisada spp. In the field survey, we found that total faunal biomass (g m-2) increased significantly with Laurencia and Palisada spp. cover. In the experiment, natural Laurencia and Palisada spp. supported an increased density (No. m-2) of fauna, however, faunal values were highest in the simulated algae treatment. This suggests that the mechanism of increased density/biomass due to Laurencia and Palisada spp. is structural complexity. Since habitat quality in Thalassia testudinum beds may be mediated by associated macroalgae, these small-scale habitat factors need to be incorporated in habitat and ecosystem conservation plans.