Despite general and wide-ranging negative effects of coral reef degradation on reef communities, hope might exist for reef-associated predators that use nursery habitats. When reef structural complexity is lost, refuge density declines and prey vulnerability increases. Here, we explore whether the presence of nursery habitats can promote high predator productivity on degraded reefs by mitigating the costs of increased vulnerability in early life, whilst allowing for the benefits of increased food availability in adulthood. We apply size-based ecosystem models of coral reefs with high and low structural complexity to predict fish biomass and productivity in the presence and absence of mangrove nurseries. Our scenarios allow us to elucidate the interacting effects of refuge availability and ontogenetic habitat shifts for fisheries productivity. We find that low complexity, degraded reefs with nurseries can support fisheries productivity that is equal to or greater than that in complex reefs that lack nurseries. We compare and validate model predictions with field data from Belize. Our results should inform reef fisheries management strategies and protected areas now and into the future.