Territorial defense by breeders influences access to resources near defended nest sites by intruder species and may have indirect effects on other species within the territory, leading to local patchiness in distribution patterns. The present study demonstrates that adult males of a damselfish, Pomacentrus amboinensis, indirectly facilitate the increased survival of conspecific juveniles through the territorial defense of their nesting site from potential egg predators. Moreover, male territoriality results in a shift in the selectivity of predation on newly settled juveniles. We monitored the fate of pairs of predator-naive, newly settled P. amboinensis placed inside and outside nesting territories. Individuals within a pair differed in size by approximately 1 mm and were tagged for individual identification. Away from male territories larger juveniles had greater survival, while within territories, larger juveniles suffered higher mortality. Behavioral observations indicated that the moonwrasse Thalassoma lunare, a predator of benthic eggs and small fishes, had reduced access to juveniles within male territories, while another predator on small fishes, the dottyback Pseudochromis fuscus, had unobstructed access to male territories. Experimental removal of P. fuscus indicated that the shift in the direction of phenotypic selection on newly settled juveniles was the indirect effect of aggression by nest-guarding male damselfish, which resulted in differential access to male territories by these two predators of small fishes. Evidence suggests that behavioral interactions between the resident community and intruders will influence patchiness in selective pressures imposed on benthic prey by influencing both the composition of predator types that can access the prey resource and their relative abundance. How this spatial and temporal patchiness in predator pressure interacts with spatial patchiness of recruiting prey will have a major influence on the resulting distribution of juveniles and their phenotypic traits.