ABSTRACT: In temperate subtidal reefs, kelp species often dominate light, while encrusting algae often dominate the substrate and are well adapted to low light conditions. Yet whether changes in algal crust cover impact recruitment dynamics of kelp species remains largely unexplored. To address this gap, we combined field surveys with laboratory and field experiments to investigate (1) the impact of algal crusts on kelp settlement and recruitment and (2) the potential effect such inhibition may have on density of subtidal kelps in a southeast Alaskan fjord. Experimental removal of algal crusts in the field resulted in dense kelp recruitment, whereas in plots where algal crusts dominated space, kelp recruitment was sparse. Kelp zoospores settled in the laboratory with no apparent selectivity for bare rock over crust surfaces, yet kelp sporophyte densities were reduced by 97 to 99% on non-coralline algal crust patches compared to bare rock, suggesting post-settlement recruitment inhibition. Despite such strong inhibition, we show that very low kelp recruit density, such as that observed in the algal crust dominated patches of our experiment, can yield high adult densities. Such observations are supported by positive correlations between kelp density and crust percent cover in field surveys of 1 m² plots across 6 reefs, suggesting broad-scale coexistence. Thus, the strong ability of kelps to colonize bare substrata in this region appears to facilitate persistence of kelps despite strong dominance of space by certain algal crusts.