A three‐year investigation was conducted in littoral areas of Elba Island using visual census to investigate settlement and recruitment of several coastal fish species both unfished and those important to small‐scale fisheries. Fish microhabitat preferences at different stages of development were examined to determine features that make these coastal areas suitable for their settlement and recruitment. Post‐larvae and recruits of46species, belonging to 18 families, were observed in the study area; the most important families were labrids (11 species) and sparids (10 species). Many of the species observed settled in shallow water (< 1 m) and near shore (< 2 m from shore) of littoral rocky areas. Three sparids,Diplodus puntazzo, D. sargusandD. vulgaris, settle in shallow water with a slope of less than 30° and reduced algal cover. They have very similar spatial requests during the first year of their life and they use the nurseries at different time. This is probably an adaptive strategy to reduce inter‐specific competition among sea‐bream settlers and recruits. Knowledge of fish settlement and spatial requirements are important to develop models for integrated and sustainable coastal zone management.