Although many coral reefs have shifted from coral-to-algal dominance, the consequence of such a transition for coral–algal interactions and their underlying mechanisms remain poorly understood. At the microscale, it is unclear how diffusive boundary layers (DBLs) and surface oxygen concentrations at the coral–algal interface vary with algal competitors and competitiveness. Using field observations and microsensor measurements in a flow chamber, we show that coral (massive Porites) interfaces with thick turf algae, macroalgae, and cyanobacteria, which are successful competitors against coral in the field, are characterized by a thick DBL and hypoxia at night. In contrast, coral interfaces with crustose coralline algae, conspecifics, and thin turf algae, which are poorer competitors, have a thin DBL and low hypoxia at night. Furthermore, DBL thickness and hypoxia at the interface with turf decreased with increasing flow speed, but not when thick turf was upstream. Our results support the importance of water-mediated transport mechanisms in coral–algal interactions. Shifts towards algal dominance, particularly dense assemblages, may lead to thicker DBLs, higher hypoxia, and higher concentrations of harmful metabolites and pathogens along coral borders, which in turn may facilitate algal overgrowth of live corals. These effects may be mediated by flow speed and orientation.