Recent studies of recruitment dynamics in demersal fishes have placed major emphasis on presettlement mortality, and little on events bridging late larval and early juvenile periods. Observations on 68 taxa of Caribbean coral reef fishes before and during settlement revealed the existence of a distinct post-settlement life phase called the transition juvenile, associated with the act of recruitment. Transition juveniles were found as solitary individuals, in conspecific groups, or in heterospecific groups. The groups were either uniform or heterogenous in appearance. The complexity of the transition phase and its apparently widespread occurrence in coral reef fishes suggests that important aspects of population structure may be determined between settlement and first appearance as a full-fledged juvenile.