Global demand for energy and oil-based products is progressively introducing petrogenic polycyclic aromatic hydrocarbons (PAHs) into sensitive marine environments, primarily from fossil-fuel exploration, transport, and urban and industrial runoff. These toxic pollutants are found worldwide, yet the long-term ecological effects on coral reef ecosystems are unknown. Here, we demonstrate that oil exposure spanning PAH concentrations that are environmentally relevant for many coastal marine ecosystems (≤5.7 μg l-1), including parts of the Great Barrier Reef, Red Sea, Asia and the Caribbean, causes elevated mortality and stunted growth rates in six species of pre-settlement coral reef fishes, spanning two evolutionarily distinct families (Pomacentridae and Lethrinidae). Furthermore, oil exposure alters habitat settlement and antipredator behaviours, causing reduced sheltering, shoaling and increased risk taking, all of which exacerbate predator-induced mortality during recruitment. These results suggest a previously unknown path, whereby oil and PAH exposure impair higher-order cognitive processing and behaviours necessary for the successful settlement and survival of larval fishes. This emphasizes the risks associated with industrial activities within at-risk ecosystems.