Reduced fishing pressure and weak predator-prey interactions within marine reserves can create trophic cascades that increase the number of grazing fishes and reduce the coverage of macroalgae on coral reefs. Here, we show that the impacts of reserves extend beyond trophic cascades and enhance the process of coral recruitment. Increased fish grazing, primarily driven by reduced fishing, was strongly negatively correlated with macroalgal cover and resulted in a 2-fold increase in the density of coral recruits within a Bahamian reef system. Our conclusions are robust because four alternative hypotheses that may generate a spurious correlation between grazing and coral recruitment were tested and rejected. Grazing appears to influence the density and community structure of coral recruits, but no detectable influence was found on the overall size-frequency distribution, community structure, or cover of corals. We interpret this absence of pattern in the adult coral community as symptomatic of the impact of a recent disturbance event that masks the recovery trajectories of individual reefs. Marine reserves are not a panacea for conservation but can facilitate the recovery of corals from disturbance and may help sustain the biodiversity of organisms that depend on a complex three-dimensional coral habitat.