Most organisms possess anti-predator adaptations to reduce their risk of being consumed, but little is known of the adaptations prey employ during vulnerable life-history transitions when predation pressures can be extreme. We demonstrate the use of a transition-specific anti-predator adaptation by coral reef fishes as they metamorphose from pelagic larvae to benthic juveniles, when over half are consumed within 48 h. Our field experiment shows that naturally settling damselfish use olfactory, and most likely innate, predator recognition to avoid settling to habitat patches manipulated to emit predator odour. Settlement to patches emitting predator odour was on average 24-43% less than to control patches. Evidence strongly suggests that this avoidance of sedentary and patchily distributed predators by nocturnal settlers will gain them a survival advantage, but also lead to non-lethal predator effects: the costs of exhibiting anti-predator adaptations. Transition-specific anti-predator adaptations, such as demonstrated here, may be widespread among organisms with complex life cycles and play an important role in prey population dynamics.