An increased abundance of macroalgae has been observed in coral reefs damaged by climate change and local environmental stressors. Macroalgae have a sublethal effect on corals that includes the inhibition of their growth, development, and reproduction. Thus, this study explored the effects of the macroalga, Caulerpa taxifolia, on the massive coral, Turbinaria peltata, under thermal stress. We compared the responses of the corals' water-meditated interaction with algae (the co-occurrence group) and those in direct contact with algae at two temperatures. The results show that after co-culturing with C. taxifolia for 28 days, the density content of the dinoflagellate endosymbionts was significantly influenced by the presence of C. taxifolia at ambient temperature (27 °C), from 1.3 × 106 cells cm-2 in control group to 0.95 × 106 cells cm-2 in the co-occurrence group and to 0.89 × 106 cells cm-2 in the direct contact group. The chlorophyll a concentration only differed significantly between the control and the direct contact group at 27 °C. The protein content of T. peltata decreased by 37.2% in the co-occurrence group and 49.0% in the direct contact group compared to the control group. Meanwhile, the growth rate of T. peltata decreased by 57.7% in the co-occurrence group and 65.5% in the direct contact group compared to the control group. The activity of the antioxidant enzymes significantly increased, and there was a stronger effect of direct coral contact with C. taxifolia than the co-occurrence group. At 30 °C, the endosymbiont density, chlorophyll a content, and growth rate of T. peltata significantly decreased compared to the control temperature; the same pattern was seen in the increase in antioxidant enzyme activity. Additionally, when the coral was co-cultured with macroalgae at 30 °C, there was no significant decrease in the density or chlorophyll a content of the endosymbiont compared to the control. However, the interaction of macroalgae and elevated temperature was evident in the feeding rate, protein content, superoxide dismutase (SOD), and catalase (CAT) activity compared to the control group. The direct contact of the coral with macroalga had a greater impact than water-meditated interactions. Hence, the competition between coral and macroalga may be more intense under thermal stress.