ABSTRACT Vitamin E is one of the most important vitamins in aquatic animal breeding, larval growth, and development. It is also considered to be a functional feed addtitive for its antioxidant and immunity-improvement role resulting in better survival and growth during early life stages. However, the role of vitamin E in the diet of milkfish larvae has not been studied in detail. Moreover, the optimal requirement of vitamin E for improved survival and growth in the larval stages of milkfish is yet to be ascertained. A 45-day feeding experiment was conducted to elucidate the effect of dietary vitamin E (alpha tocopherol) supplementation on the growth, survival, and fatty acid composition of milkfish, Chanos chanos, larvae. During the trial, five iso-nitrogenous and iso-energetic (~580 g kg−1 crude protein, 120 g kg−1 crude lipid) experimental larval diets with varying levels of vitamin E 0 (control E0), 100 (E100), 200 (E200), 300 (E300) and 400 (E400) mg kg−1 were tested in 18 days posthatch larvae (mean weight: 48.25 ± 0.08 mg). Milkfish larvae (1,500) were randomly distributed into 15 fiber-reinforced plastic (FRP) rectangular tanks of 100 L capacity (n = 100) in a flow-through rearing system. The results revealed that larvae fed with a diet containing vitamin E supplementation at 200 mg (E200) enhanced (p < .05) the growth performance, final body weight (371.7 ± 12.80 mg), weight gain percentage (628.76 ± 63.12%), and specific growth rate (4.31 ± 0.80%) compared with the E0 fed diet. Also, fish feed with E200 diet had a significantly higher protein efficiency ratio (0.53 ± 0.08) than the control (E0) (0.40 ± 0.01). Vitamin E and lipid content of postfed whole larvae were linearly correlated (R 2 = 0.956) with dietary vitamin E inclusions up to 300 mg kg−1. Histological examinations revealed that the length of intestinal villi and the concentration of lymphoid cells in the lamina propria of the treatments E200, E300, and E400 were higher, compared to E0 and E100 treatments. Red blood cell (p < 0.05) and white blood cell (p < 0.01) counts were significantly higher in E200 treatment than in the rest of the treatments. Larvae fed with an E200 and E300 diet showed significantly (p < 0.05) increased total lymphocyte count, while myelocyte count was significantly decreased (p < 0.01). Based on a curvilinear (polynomial) regression analyses, the optimum specific growth rate, final body weight, weight gain, protein efficiency ratio, and feed efficiency ratio were obtained at dietary vitamin E levels of 210, 205, 207, 243, and 242 mg kg−1 diet, respectively. Accordingly, the optimum dietary vitamin E required for milkfish in a range of 205 to 243 mg kg−1 is beneficial for better health, survival, and growth. The findings of this study can be used as the baseline scientific information on the vitamin E requirement for the formulation of a cost‐effective diet for milkfish larvae.