Marine foundation species such as corals, seagrasses, salt marsh plants, and mangrove trees are increasingly found to engage in mutualistic interactions. Because mutualisms by their very nature generate a positive feedback between the species, subtle environmental impacts on one of the species involved may trigger mutualism breakdown, potentially leading to ecosystem regime shifts. Using an empirically parameterized model, we investigate a facultative mutualism between seagrass and lucinid bivalves with endosymbiotic sulfide-oxidizing gill bacteria in a tropical intertidal ecosystem. Model predictions for our system show that, by alleviating the build-up of toxic sulfide, this mutualism maintains an otherwise intrinsically unstable seagrass ecosystem. However, an increase in seagrass mortality above natural levels, due to e.g. desiccation stress, triggers mutualism breakdown. This pushes the system in collapse-and-recovery dynamics (‘slow-fast cycles’) characterized by long-term persistent states of bare and seagrass-dominated, with rapid transitions in between. Model results were consistent with remote sensing analyses that suggest feedback-mediated state shifts induced by desiccation. Overall, our combined theoretical and empirical results illustrate the potential of mutualistic feedbacks to stabilize ecosystems, but also reveal an important drawback as small environmental changes may trigger shifts. We therefore suggest that mutualisms should be considered for marine conservation and restoration of seagrass beds.