Significant increases in the population of the echinoid bioeroder Diadema mexicanum that may soon follow severe El Niño events, such as in 1982–1983, can have a significant negative impact on the carbonate budget of coral reefs. We developed a spatially explicit model that uses agent-based modeling techniques to simulate the interactions between damselfish and sea urchins on an eastern Pacific coral reef following an El Niño-Southern Oscillation (ENSO) event where high echinoid abundances and low coral cover were prevalent. Our modeling study suggests that the agonistic behavior of damselfish towards echinoids invading their defended algal lawn territories has a magnifying effect on the degree of bioerosion attributed to echinoids. This is due to the increased likelihood that sea urchins ejected from damselfish territories will form concentrated aggregations and remain grazing and eroding coral for longer periods of time. This is a novel insight that contrasts with the previous understanding of the positive effect that damselfish have on reef carbonate budgets by protecting carbonate substrates that lie within their defended algal lawn territories. The increased degradation of coral stands attributed to the indirect damselfish effect, if it results in sea urchins eroding subsurface coral framework structures, causing instability and collapse (especially during periods of high-water motion), may contribute to the fracturing of large portions of coral framework blocks, affecting the recovery trajectory of reefs following a severe El Niño disturbance event.