1. Hardbottom habitats of Biscayne Bay, a shallow lagoon adjacent to the city of Miami, Florida, USA, contain a limited number of coral species that represent a small subset of the species found at nearby offshore hardbottom and reef habitats of the Florida Reef Tract. Although the physical characteristics of this basin make it a marginal environment for coral growth, the presence of dense populations of Siderastrea radians and Porites furcata indicate that these, as well as other corals that are found at lower densities, are able to tolerate extreme and fluctuating conditions. Three factors, temperature, sedimentation, and salinity, appear to limit coral abundance, diversity, and distribution within Biscayne Bay. 2. Temperatures exhibit high frequencies of extreme high and low values known to cause coral stress and mortality elsewhere. Similarly, sedimentation rates are very high and sediment resuspension caused by currents, storms and boating activities commonly bury corals under sediment layers. Sediment burial was shown experimentally to influence growth and mortality of S. radians. 3. The salinity of Biscayne Bay is influenced by freshwater inputs from canal, sheetflow and groundwater sources that create a near-shore environment with low mean salinity and high salinity fluctuation. Coral communities along this western margin have the lowest coral density and species richness. Chronic exposure to low salinity was shown experimentally to cause a decrease in the growth of S. radians. 4. The location of Biscayne Bay, downstream of a large restoration effort planned for the Everglades watershed, highlights the need to understand the relationship between the physical environment and the health of benthic communities. The data presented here provide the type of scientific information needed so that management decisions can take into account the potential impacts of human activities on the health of coral populations that are already near their tolerance limits for temperature, salinity, and sedimentation. Copyright © 2003 John Wiley & Sons, Ltd.