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The fishery of the western rock lobster, Panulirus cygnusGeorge, 1962, is Australia’s most valuable wild-caught single-species fishery. Recruitment in some regions of the fishery was observed to be significantly lower than expected after the 2010/2011 West Australian marine heatwave that caused extensive disturbance of dominant coastal habitats. This event generated interest in the study of the factors influencing survival and recruitment of post-larval benthic P. cygnusafter settlement. The habitat associations of the highly cryptic post-settlement early-juveniles were previously unknown, with only anecdotal observations of individuals within limestone crevices in nearshore habitats. Our study used early-juveniles derived from ongoing monitoring of puerulus settlement to examine their habitat association mechanism in mesocosm experiments. Comparison of common nearshore habitat assemblages (bare sand, limestone crevices, and seagrasses (Posidoniaand Amphibolis) at varying seagrass densities) found that most early-juveniles associated strongly with Amphibolisassemblages at high stem densities (~2,100 stems m–2). A shift in association between Amphibolisfronds and stems at high stem density to Amphibolis-shaded sand and leaf debris at low stem density indicated active habitat selection by early-juveniles. Habitat choices were tested with the scents of prey items and habitat types within Amphibolisassemblages using Y-maze bioassays. No significant olfactory choices were found, suggesting that habitat associations may be driven by multiple cues. Our study provides new laboratory-based insights into the habitat association of early-juvenile P. cygnusand suggests changes in seagrass assemblage identity and density are likely to be important. Further experimentation is needed to define the cues driving these patterns. The impact of habitat change on recruitment in this important fishery remains unknown and should be an objective of future research.