Ten reefs off the Sunshine Coast, south-eastern Queensland (26.2-26.8°S, 153.2°E), Australia, were sampled from 1991 to 2000. They were found to contain a rich fauna of 247 species of marine sponges (Porifera) in 97 genera, 44 families and 14 orders, with 51% of species not yet recorded elsewhere from the Indo-west Pacific, representing a highly unique fauna in this biogeographic transition zone between the Solanderian and Peronian provinces. Reefs were relatively heterogeneous in species richness (18-83 species/reef, mean 41 species/reef), despite equivalent collection effort, and were highly heterogeneous in taxonomic composition (34% mean 'apparent endemism'/reef), with only 15 species co-occurring in more than five reefs. Sixty per cent of species were 'rare' (found only on single reefs) and only 19% of species co-occurred in the adjacent Moreton Bay region. Gradients in species richness and taxonomic composition were not correlated with the distance between reefs or their latitude and only partially correlated with their distance from the shore, but they were highly correlated when sites were combined on the basis of both distance from shore and latitude. Two southern outer reefs (5.5-9 km from the coast) and four northern inner reefs (0.5-1.25 km from the coast) had highly distinctive faunas (richness and taxonomic composition), with a gradual gradient of dissimilarities for reefs intermediate between these two groups of sites, similar to sponge faunal patterns from other studies conducted at much larger spatial scales. One southern outer reef, Flinders Reef, was anomalous compared with the general regional fauna. Flinders Reef had low species richness, the highest taxonomic distinctness and the least heterogeneity in terms of taxonomic composition at species, genus and family levels, with affinities closer to the southern Great Barrier Reef than to the Sunshine Coast or Moreton Bay reefs. This finding is significant because Flinders Reef is the only designated highly protected marine area outside of Moreton Bay and is allegedly representative of the marine biodiversity of the whole region, yet contains few of the sponge genetic resources of the region, which has implications for the design and scale of marine reserves. Family-level taxa were poor surrogates of species diversity. Factors potentially responsible for spatial heterogeneity of sponge faunas between groups of reefs are discussed, including gradients in water quality (light, turbidity, siltation) and requirements for habitat specialisation by some species.