Subtropical and tropical islands are undergoing rapid urbanization as the human population expands globally. Urbanization disrupts coastal ecosystems through several pathways—including the replacement of natural habitats with concrete structures that increase runoff pollution—but it remains difficult to isolate and characterize specific impacts of urbanization on marine ecosystems. The historical gradient in urbanization on the subtropical island of Okinawa, Japan, sets up a natural laboratory to study urbanization effects on nearshore ecosystems. Physicochemical parameters and bacterial community composition were assessed every 2 weeks for 1 year at two nearshore sites adjacent to watersheds with > 70% urban land use and two nearshore sites adjacent to watersheds with > 70% rural land use. Urbanization increased freshwater input and nutrient loading—indicated by decreased salinity and elevated nitrate + nitrite, ammonium, and phosphate at urban sites—despite the urban sites being more open to flushing due to land reclamation projects filling in the coral lagoon. Urbanization significantly altered microbial community composition by increasing diversity through the addition of fecal indicator and pathogenic bacteria—eight orders of bacteria were only detected in urban samples, whereas only Verrucomicrobiales was unique to rural samples. The change in microbial community composition at urban sites persisted throughout the seasonal cycle, suggesting a regime change or sustained disturbance. The altered physicochemical conditions and microbial communities at urban sites could degrade nearby coral reefs and their ecosystem services, highlighting the importance of coastal land management in marine conservation efforts.