By using TPA (12-tetra-decanoyl-phorbol-13-acetate) an artificial inducer for metamorphosis, it was possible to determine the effect of crude oil on settlement and metamorphosis of planulae of the soft coral Heteroxenia fuscescens. In the absence of crude oil, TPA induced metamorphosis in 97% of these planulae. The effect of crude oil on metamorphosis and appearance of deformed primary polyps was concentration dependent. Only 50% of the planulae grown in experimental vessels with crude oil at a concentration of 0.1 ppm covering the bottom and walls of the vessels underwent metamorphosis when triggered by TPA. Of those planulae exposed to 100 ppm of the pollutant only 3% metamorphosed after being induced by TPA. Furthermore, oil film on the water surface was less toxic to the larvae than the crude oil covering the bottom and walls of the experimental vessels. Some of the oil treated planulae died while others remained viable, looked normal, but did not metamorphose after being presented with TPA. These findings suggest that even at very low concentrations crude oil affects larvae of H. fuscescens preventing their settlement and metamorphosis. Therefore it is possible that oil spills affect coral recruitment by decreasing the viability and the settlement of coral planulae. This assay represents a new sensitive bioindicator to detect the impact of oil pollution on tropical and subtropical marine environments.