The diet of juvenile Crested Terns (Sterna bergii) at Phillip Island, Victoria was examined throughout two breeding periods, 1999–2000 and 2000–01. Nine species of fish and two species of squid were identified in the chick regurgitations, with significant differences among sampling days and between seasons. Anchovy (Engraulis australis) and Jack Mackerel (Trachurus declivis) were the two most abundant prey in both seasons, making up 63% and 21% of the diet, respectively, followed by Barracouta (Thyrsites atun, 4%) and other fish (12%). Anchovy was also the main prey for Little Penguins (Eudyptula minor) in 2000–01. In addition, years of low numbers of breeding Crested Terns coincided with years of low breeding success of Little Penguins over seven breeding seasons at Phillip Island. It seems that the breeding performance of both terns and penguins may be affected by the same variation of food supply. We also estimated roughly that this tern population consumes 28.7 tonnes of fish per breeding period based on the daily energy expenditure of seabirds. This consumption is about 10% of the commercial catches of Anchovy and Jack Mackerel in 2000–01, highlighting the importance of terns as natural consumers in the local ecosystem during the breeding period.