Coral reefs are extremely productive ecosystems, but widespread changes to benthic community structure resulting from anthropogenic impacts are likely to impact the transfer of organic matter between trophic levels, altering trophodynamics and functional diversity. We used stable isotope analysis to investigate differences in resource availability, niche width and trophic diversity of seven coral reef fish species representing key functional feeding groups on a sponge-dominated reef and an adjacent, coral-dominated reef. Four out of seven fish species had wider isotopic niches at the sponge-dominated reef compared to the coral-dominated reef, including the obligate corallivore. The proximity of the isotopic niche of the obligate corallivore to the isotopic niche of the detritivore suggests that the obligate corallivore supplemented its diet with detritus at the sponge-dominated reef. Fish sampled at the sponge-dominated reef had a significantly lower mean trophic position, used a lower range of resources (based on δ13C range) and obtained more carbon from benthic production than at the coral-dominated reef. Trophic diversity was lower and functional redundancy higher at the sponge-dominated reef, suggesting that fish on the sponge reef had more similar diets to each other than at the coral-dominated site. Observed differences in trophic structure between the two sites are likely due to fewer organic matter pathways supporting secondary production at the sponge-dominated reef, suggesting that transitions sponge-dominated systems will reduce community stability by eroding the potential for niche partitioning and species co-existence.