Habitat complexity is a strong determinant of fish assemblage structure. Enhanced food resources and protection from predators are generally considered the main benefits of vegetated areas. We investigated the diel and vertical movements of preflexion fish larvae within and above the leaf canopy of Posidonia oceanica to determine if it acts as an important habitat for larval stage fish. Samples were taken with moored plankton nets during the night and day at two depths (13 and 15 m) over five consecutive days in July 2000 in the Marine Protected Area off Tabarca Island (Spain, SW Mediterranean Sea). In total, 353 fish larvae were captured. The most abundant taxa were Sardinella aurita, Sparidae, Engraulis encrasicolus and Gobiidae. Sparidae were more abundant within the leaf canopy during the day but increased in waters 2 m above the canopy at night. In contrast, Sardinella aurita were present throughout the entire water column during both the day and night. We conclude that the P. oceanica leaf canopy is important as a transitional shelter for the early stage larvae of some demersal fish species.