Predators can influence plants indirectly by altering spatial patterns of herbivory, so studies assessing the relationship between perceived predation risk and habitat use by herbivores may improve our understanding of community organization. In marine systems, the effects of predation danger on space use by large herbivores have received little attention, despite the possibility that predator-mediated alterations in patterns of grazing by these animals influence benthic community structure. We evaluated the relationship between habitat use by foraging dugongs (Dugong dugon) and the threat of tiger shark predation in an Australian embayment (Shark Bay) between 1997 and 2004. Dugong densities were quantified in shallow (putatively dangerous) and deep (putatively safe) habitats (seven survey zones allocated to each habitat), and predation hazard was indexed using catch rates of tiger sharks (Galeocerdo cuvier); seagrass volume provided a measure of food biomass within each zone. Overall, dugongs selected shallow habitats, where their food is concentrated. Foragers used shallow and deep habitats in proportion to food availability (input matching) when large tiger sharks were scarce and overused deep habitats when sharks were common. Furthermore, strong synchrony existed between daily measures of shark abundance and the extent to which deep habitats were overused. Thus, dugongs appear to adaptively manage their risk of death by allocating time to safe but impoverished foraging patches in proportion to the likelihood of encountering predators in profitable but more dangerous areas. This apparent food-safety trade-off has important implications for seagrass community structure in Shark Bay, as it may result in marked temporal variability in grazing pressure.