Species that shelter in a biogenic habitat can influence their refugia and, in turn, play an essential role in shaping local patterns of biodiversity. Here we explore a positive feedback loop between the provisioning rate of habitat-forming branching corals and their associated fishes and show how interactions between two groups of fish—the planktivorous damselfish and predatory hawkfish—altered the feedback. A field experiment confirmed that skeletal growth of branching coral (genus Pocillopora) increased substantially with increasing numbers (biomass) of resident fishes, likely because they greatly increased the interstitial concentrations of nutrients. Because there is a positive relationship between colony size and number (biomass) of associated fishes (primarily damselfishes in the Family Pomacentridae), a structure–function feedback loop exists in which increasing numbers of damselfish enhance coral growth and larger corals host greater abundances (and species richness) of fish. However, interactions between damselfishes and arc-eye hawkfish, Paracirrhites arcatus, a largely solitary resident, can disrupt this positive feedback loop. Field surveys revealed a marked pattern of fish occupancy related to coral size: Pocillopora colonies of sufficient size to host fish ([40 cm circumference) had either groups of damselfish or an arc-eye hawkfish; only larger colonies ([75 cm) were occupied by both the damselfish and hawkfish. Subsequent short- and long-term experiments revealed that on intermediate-sized Pocillopora colonies, arc-eye hawkfish prevented the establishment of damselfish by suppressing their recruitment. The demographic consequences to the host coral were substantial; in a 1-year-long experiment, intermediate-size Pocillopora occupied by hawkfish grew at half the rate of corals that hosted groups of damselfish. These findings indicate that: (1) species which occupy a biogenic habitat can enhance the provisioning rate of their habitat; (2) such positive feedbacks between community structure and ecosystem function can be disrupted by a strong interactor; (3) even substantial consequences on ecosystem processes that arise can be difficult to discern.