All reef-forming corals depend on the photosynthesis performed by their algal symbiont, and such corals are therefore restricted to the photic zone. The intensity of light in this zone declines over several orders of magnitude--from high and damaging levels at the surface to extreme shade conditions at the lower limit. The ability of corals to tolerate this range implies effective mechanisms for light acclimation and adaptation. Here we show that the fluorescent pigments (FPs) of corals provide a photobiological system for regulating the light environment of coral host tissue. Previous studies have suggested that under low light, FPs may enhance light availability. We now report that in excessive sunlight FPs are photoprotective; they achieve this by dissipating excess energy at wavelengths of low photosynthetic activity, as well as by reflecting of visible and infrared light by FP-containing chromatophores. We also show that FPs enhance the resistance to mass bleaching of corals during periods of heat stress, which has implications for the effect of environmental stress on the diversity of reef-building corals, such as enhanced survival of a broad range of corals allowing maintenance of habitat diversity.