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Recent studies have shown that there are high degrees of spatial and temporal stability in coral reef fish assemblage structures in a continuous habitat, in contrast to results of observations in isolated habitats. In order to determine the reason for the difference in temporal stability of fish assemblage structures in a continuous habitat site and an isolated habitat site, population dynamics and spatial distributions of coral reef fishes (six species of pomacentrids and two species of apogonids) in the two habitat site were investigated over a 2-year period in an Okinawan coral reef. The population densities of pomacentrid and apogonid species increased in juvenile settlement periods at both sites, but the magnitude of seasonal fluctuation in population density was significantly greater at the isolated habitat site, indicating that the rate of juvenile settlement and mortality rate in the isolated habitat were greater than those in the continuous habitat. The magnitude of aggregation of fishes, which affects density-dependent biological interactions that modify population density such as competition and predation, was also significantly greater at the isolated habitat site, especially in the juvenile settlement season. Most of the fishes at the isolated habitat site exhibited more generalized patterns of microhabitat selection because of less coral coverage and diversity. The seasonal stability in the species composition of fishes was greater at the continuous habitat site than that at the isolated habitat. Our findings suggest that the relative importance of various ecological factors responsible for regulation of the population density of coral reef fishes (e.g., competition, predation, microhabitat selection and post-settlement movement) in a continuous habitat site and the isolated habitat site are different.