Large-scale coral reef restoration is needed to help recover structure and function of degraded coral reef ecosystems and mitigate continued coral declines. In situ coral propagation and reef restoration efforts have scaled up significantly in past decades, particularly for the threatened Caribbean staghorn coral, Acropora cervicornis, but little is known about the role that native competitors and predators, such as farming damselfishes, have on the success of restoration. Steep declines in A. cervicornis abundance may have concentrated the negative impacts of damselfish algal farming on a much lower number of coral prey/colonies, thus creating a significant threat to the persistence and recovery of depleted coral populations. This is the first study to document the prevalence of resident damselfishes and negative effects of algal lawns on A. cervicornis along the Florida Reef Tract (FRT). Impacts of damselfish lawns on A. cervicornis colonies were more prevalent (21.6% of colonies) than those of other sources of mortality (i.e., disease (1.6%), algal/sponge overgrowth (5.6%), and corallivore predation (7.9%)), and damselfish activities caused the highest levels of tissue mortality (34.6%) among all coral stressors evaluated. The probability of damselfish occupation increased as coral colony size and complexity increased and coral growth rates were significantly lower in colonies with damselfish lawns (15.4 vs. 29.6 cm per year). Reduced growth and mortality of existing A. cervicornis populations may have a significant effect on population dynamics by potentially reducing important genetic diversity and the reproductive potential of depleted populations. On a positive note, however, the presence of resident damselfishes decreased predation by other corallivores, such as Coralliophila and Hermodice, and may offset some negative impacts caused by algal farming. While most negative impacts of damselfishes identified in this study affected large individual colonies and <50% of the A. cervicornis population along the FRT, the remaining wild staghorn population, along with the rapidly increasing restored populations, continue to fulfill important functional roles on coral reefs by providing essential habitat and refuge to other reef organisms. Although the effects of damselfish predation are, and will continue to be, pervasive, successful restoration efforts and strategic coral transplantation designs may help overcome damselfish damage by rapidly increasing A. cervicornis cover and abundance while also providing important information to educate future conservation and management decisions.