Macroalgal beds have been suggested to be an important settlement habitat for a diversity of reef fishes, yet few studies have considered how the composition or structure of macroalgal beds may influence fish settlement. The aim of this study was to investigate how the physical characteristics of Sargassum beds, a common macroalga on inshore coral reefs, influence the abundance of recently-settled rabbitfishes (Siganidae) on Orpheus Island, Great Barrier Reef. The abundance of recently-settled rabbitfish (< 3 cm total length), the density and height of Sargassum thalli, and benthic composition were quantified within replicate 1-m² quadrats across 15 mid-reef flat sites. A total of 419 recently-settled rabbitfish from three species (Siganus doliatus, S. lineatus and S. canaliculatus) were recorded across 150 quadrats (range 0–16 individuals m⁻²), with S. doliatus accounting for the majority (85.2%) of individuals recorded. The abundance of S. doliatus and S. lineatus was greatest at moderate Sargassum densities (ca. 20–30 holdfasts m⁻²) and generally increased with Sargassum height and the cover of ‘other’ macroalgae. These findings demonstrate the potential importance of the physical characteristics of macroalgal beds to the settlement of rabbitfishes on inshore reef flats.