Artificial fertilizers are contributing to the replacement of eelgrass (Zostera marina) by sea lettuce (Ulva lactuca) in estuaries of Prince Edward Island (PEI), Canada. In this study, we found that the nearshore fish community differed between areas dominated by these two vegetations within an estuary in every month sampled (April–August). Adult northern pipefish (Syngnathus fuscus), threespine stickleback (Gasterosteus aculeatus), blackspotted stickleback (Gasterosteus wheatlandi), and Atlantic silverside (Menidia menidia) were most strongly associated with eelgrass, while mummichog (Fundulus heteroclitus), ninespine stickleback (Pungitius pungitius), and American eel (Anguilla rostrata) were often more numerous in sea lettuce. Sea lettuce stations tended to have more young-of-the-year mummichog, fourspine stickleback (Apeltes quadracus), and Gasterosteus sp. than eelgrass stations but fewer young-of-the-year northern pipefish and Atlantic silverside. Fish richness and abundance were significantly lower in the sea lettuce than eelgrass habitat during August when benthic hypoxia occurred. We conclude that the loss of eelgrass from PEI estuaries will result in significant declines in fish biodiversity.