Late larvae of the serranid coral trout Plectropomus leopardus (Lacepède), captured in light traps, were released during the day both in open water and adjacent to two reefs, and their behaviour was observed by divers at Lizard Island, northern Great Barrier Reef. Coral trout larvae (n = 110) were present in light-trap catches from 18 November to 3 December 1997, including new moon (30 November). The swimming speed of larvae in open water or when swimming away from reefs was significantly greater (mean 17.9 cm s−1) than the speed of larvae swimming towards or over reefs (mean 7.2 cm s−1). Near reefs, larvae swam at average depths of 2.7 to 4.2 m, avoiding 0 to 2 m. In open water, swimming depth varied with location: larvae >1 km east of Lizard Island swam steeply downward to >20 m in 2 to 4 min; larvae >1 km west oscillated between 2.6 and 13 m; larvae 100 to 200 m east of Lizard Island oscillated between 0.8 and 15 m. Nearly all larvae swam directionally in open water and near reefs. In open water, the average swimming direction of all larvae was towards the island, and 80% (4 of 5) swam directionally (p < 0.05, Rayleigh's test). Larvae swam directionally over the reef while looking for settlement sites. The frequency of behaviours by larvae differed between two reefs of different exposure and morphology. Depending on site, 26 to 32% of larvae released adjacent to reefs swam to open water: of these, some initially swam towards or over the reef before swimming offshore. In some cases, offshore-swimming seemed to be due to the presence of predators, but usually no obvious cause was observed. Depending on the reef, 49 to 64% of the larvae settled. Non-predatory reef residents aggressively approached 19% of settlers. Between 5 and 17% of the larvae were eaten while approaching the reef or attempting to settle, primarily by lizardfishes but also by wrasses, groupers and snappers. A higher percentage of larvae settled in the second week of our study than in the first. Average time to settlement was short (138 s ± 33 SE), but some larvae took up to 15 min to settle. Average settlement depth was 7.5 to 9.9 m, and differed between locations. No settlement took place on reef flats or at depths <4.2 m. Larvae did not appear to be selective about settlement substrate, but settled most frequently on live and dead hard coral. Late-stage larvae of coral trout are capable swimmers with considerable control over speed, depth and direction. Habitat selection, avoidance of predators and settlement seem to rely on vision.