Red grouper (Epinephelus morio) is an economically important species in the reef fish community of the southeastern United States, and especially the Gulf of Mexico. It is relatively common in karst regions of the Gulf and is associated with low-relief rocky features devoid of overlying sediments. Working both inshore in Florida Bay, Florida (U.S.A.), and offshore in the Gulf of Mexico shelf-edge fishery reserves, Madison Swanson and Steamboat Lumps, we characterized red-grouper habitat and the associated faunal assemblages and demonstrated through a series of experiments that red grouper expose rocky habitat by excavating with their mouths and fanning with their fins to clear away surficial sediment, thereby providing habitat for themselves as well as other reef-dwelling organisms. They also maintain this habitat by periodically clearing away sediment and debris. Such maintenance provides a clean rocky substrate for the attachment of sessile invertebrates, thereby modifying habitat features to provide refuge for many other species of fish and motile invertebrates. We demonstrated increased biodiversity and abundance associated with habitat structured by red grouper, and we speculate here as to its fishery importance as habitat for other economically important species such as spiny lobster (Panulirus argus) and vermilion snapper (Rhomboplites aurorubens).