Facilitation and competition for space can influence the rate of development and the diversity of benthic marine communities after a disturbance. The larvae of many sessile marine invertebrates display behavioral selection of permanent attachment sites during settlement. Settlement preferences may be adaptations to local species interactions and environmental conditions, particularly if selection of appropriate habitat influences individual fitness post settlement. Because assessing habitat quality can be energetically costly, some species use settlement cues provided by pioneer species to quickly locate potential sites. The processes that determine the distribution and abundance of cue-containing pioneer species and the subsequent consequences of using a settlement cue for late arriving species can affect resilience of a benthic community. Laboratory assays demonstrate that the larvae of many reef-building corals can be induced to settle and metamorphose by chemical cues in the cell walls of crustose coralline algae (CCA). However, it is unclear if the availability cue-containing CCA on the reef influences recruitment patterns of reef-building corals. I used field experiments and observations to examine factors influencing relative abundance and coexistence among CCA and both empirical and theoretical approaches to determine subsequent consequences for coral recruits using the settlement cue. Species of CCA that were 'preferred' settlement substrate for Pocilloporid larvae morphologically had a thin profile and facilitated coral settlers in situ. The distribution of faster expanding thin CCA was limited to crevices by grazing. Thus settlement cues provided by thin CCA influenced fitness of recently settled corals by indicating habitats where incidental mortality by the grazing activity of large herbivores was halved and by providing a spatial refuge from competition with harmful macroalgae. Contrastingly, 'avoided' CCA, which were more common on exposed reef surfaces because their morphologically thick profiles tolerated grazing, inhibited the recruitment of corals. A simple population model for spatial competition among different CCA types (inhibitors and facilitators) and coral recruits indicated that the presence of facilitator CCA can increase the rate of population growth and cover of coral at equilibrium. Behavioral selection of habitat by settling corals for CCA species that facilitate recruitment may enhance resilience of coral reefs.