The oxygen and nutrient dynamics of the zooxanthellate, upside down jellyfish (Cassiopea sp.), were determined both in situ and during laboratory incubations under controlled light conditions. In the laboratory, Cassiopea exhibited a typical Photosynthesis–Irradiance (P–I) curve with photosynthesis increasing linearly with irradiance, until saturation was reached at an irradiance of ~400 μE m−2 s−1, with photosynthetic compensation (photosynthesis = respiration) being achieved at an irradiance of ~50 μE m−2 s−1. Under saturating irradiation, gross photosynthesis attained a rate of almost 3.5 mmol O2 kg WW−1 h−1, whereas the dark respiration rate averaged 0.6 mmol O2 kg WW−1 h−1. Based upon a period of saturating irradiance of 9 h, the ratio of daily gross photosynthesis to daily respiration was 2.04. Thus, photosynthetic carbon fixation was not only sufficient to meet the carbon demand of respiration, but also to potentially support a growth rate of ~3% per day. During dark incubations Cassiopea was a relatively minor source of inorganic N and P, with the high proportion of NO X (nitrate + nitrite) produced indicating that the jellyfish were colonised by nitrifying bacteria. Whereas, under saturating irradiance the jellyfish assimilated ammonium, NO X and phosphate from the bathing water. However, the quantities of inorganic nitrogen assimilated were small by comparison to carbon fixation rates and the jellyfish would need to exploit other sources of nitrogen, such as ingested zooplankton, in order to maintain balanced growth. During in situ incubations the presence of Cassiopea had major effects on benthic oxygen and nutrient dynamics, with jellyfish occupied patches of sediment having 3.6-fold higher oxygen consumption and 4.5-fold higher ammonium regeneration rates than adjacent patches of bare sediment under dark conditions. In contrast at saturating irradiance, jellyfish enhanced benthic photosynthetic oxygen production almost 100-fold compared to the sediment alone and created a small sink for inorganic nutrients, whereas unoccupied sediment patches were sources of inorganic nutrients to the water column. Overall, Cassiopea greatly enhanced the spatial and temporal heterogeneity of benthic fluxes and processes by creating “hotspots” of high activities which switched between being sources or sinks for oxygen and nutrients over diurnal irradiance cycles, as the metabolism of the jellyfish swapped between heterotrophy and net autotrophy.