Abstract Distribution and survival of fish are influenced by benthic habitat and complexity. While many studies have investigated the effects of algal cover on fishes in reef habitats, comparatively less is known regarding this relationship in mangrove habitats. Possible links between substrate macro-algal cover and fish distribution were studied in a Caribbean mangrove lagoon via visual surveys and algal removal experiments. In addition, the effects of algae on relative predation were tested by calculating survival of tethered brachyuran prey, whose predators are known to include larger lutjanid (snapper) juveniles. Comparisons of algae and fish distributions show that percent cover of algae and juvenile lutjanid, Lutjanus griseus (gray snapper) abundances were significantly negatively correlated. Results from the algae removal experiment showed that algae had a negative effect on abundance of carnivorous fishes in two (out of three) locations in the lagoon. In addition, tethered prey had significantly higher proportional survival in plots with algae-present relative to plots with algae-absent. We present here experimental evidence that increased algal growth in mangroves may reduce predator encounter rates by prey. These observations are important, as the presence of carnivorous fishes is a key factor for the maintenance of high diversity in mangrove and on neighboring coral reefs. Furthermore, findings from this study imply that algal cover must be considered when protecting mangrove habitat.