The colonial ascidian—algal symbiosis Didemnum molle Herdman occurs in large numbers (densities of>100 colonies/m2) on shallow patch reefs in the lagoon at Lizard Island, Australia. Shallow—water currents in the lagoon are driven unidirectionally by the southeast trade winds most of the year. The patch reefs are several hundred metres apart and are separated by sand flats. The largest populations of D. molle occur on the upstream ends of the patch reefs. D. molle larvae, followed underwater, dispersed invariably downstream in the direction of the water current at °1—2 m/min. Although larvae were capable of swimming for up to 2 h, they generally settled in 10—15 min when given a suitable substratum such as a dark surface. Larvae experimentally denied a suitable substratum for 40 min settled rapidly when provided with a dark surface, suggesting that when larvae encounter a reef after drifting over sand flats, they probably settle immediately. A qualitative model of larval dispersal was developed to predict the settlement pattern of D. molle in the lagoon at Lizard Island. Three predictions of the model were tested by measuring larval recruitment upstream and downstream of an experimental patch reef for 1 wk before, then 1 wk after denuding the reef of all reproductive D. molle colonies. The results agree with the model, indicating that larval recruitment of D. molle in the lizard Island lagoon is a highly predictable process. The settlement pattern that results from the dispersal model describes the upstream distribution of adult D. molle colonies on patch reefs in the Lizard Island lagoon.