Algal growth and damselfish (Eupomacentrus planifrons) territories were studied in two reef habitats at Discovery Bay, Jamaica. Damselfish territories were contiguous in the reef flat (0 to 2.5 m), where the algal composition and biomass varied from territory to territory. In contrast, on the lower reef terrace (22 m), damselfish territories were often spatially segregated. While the algal composition of the territories was more uniform on the reef terrace, the total algal biomass was lower than in the territories on the reef flat. Damselfish are largely herbivorous, and they defend their territories against most intruding fish, including a number of herbivorous species. Areas of the reef terrace outside of damselfish territories were heavily grazed by herbivorous fishes and contained only small quantities of non-crustose algae. The reef terrace territories were characterized by a multispecific turf of algae (greens, blue-greens, and reds) covering the Acropora cervicornis framework and by the leafy, brown alga, Lobophora variegata. A rapid reduction in the biomass of brown algae and filamentous algae was noted when damselfish were permanently removed from their territories. Only calcified, encrusting algae — plants apparently somewhat undesirable as fish food sources — would be common on the terrace zone of this reef if damselfish territories were absent. Damselfish territoriality may significantly influence the dynamics of some reefs by increasing the biomass of the algal turf thereby increasing; reef productivity. Since blue-green algae, potential nitrogen fixers, occur in these algal turfs, the fish may also be indirectly affecting reef nutrition.