The canopy-forming kelp Macrocystis pyrifera (L.) C.Ag. was experimentally manipulated to determine its influence on the species composition of an assemblage of temperate zone reef fishes. The presence of Macrocystis enhanced local abundance for some species and reduced the abundance of others. For some species that were positively affected, the magnitude of the kelp effect was stronger for recently settled recruits than older juvenile and adult stages. The reduced recruitment of two benthic species appears to be related to the affinity of these fishes for understory algae, the cover of which is inversely related to the abundance of Macrocystis. The occurrence and relative abundance of canopy and understory algae can explain much of the local spatial variation in the species composition offish recruitment among temperate rocky reefs.