Natural and anthropogenic disturbances are leading to changes in the nature of many habitats globally, and the magnitude and frequency of these perturbations are predicted to increase under climate change. Globally coral reefs are one of the most vulnerable ecosystems to climate change. Fishes often show relatively rapid declines in abundance when corals become stressed and die, but the processes responsible are largely unknown. This study explored the mechanism by which coral bleaching may influence the levels and selective nature of mortality on a juvenile damselfish, Pomacentrus amboinensis, which associates with hard coral. Recently settled fish had a low propensity to migrate small distances (40 cm) between habitat patches, even when densities were elevated to their natural maximum. Intraspecific interactions and space use differ among three habitats: live hard coral, bleached coral and dead algal-covered coral. Large fish pushed smaller fish further from the shelter of bleached and dead coral thereby exposing smaller fish to higher mortality than experienced on healthy coral. Small recruits suffered higher mortality than large recruits on bleached and dead coral. Mortality was not size selective on live coral. Survival was 3 times as high on live coral as on either bleached or dead coral. Subtle behavioural interactions between fish and their habitats influence the fundamental link between life history stages, the distribution of phenotypic traits in the local population and potentially the evolution of life history strategies.