Climate change will alter many aspects of the ecology of organisms, including dispersal patterns and population connectivity. Understanding these changes is essential to predict future species distributions, estimate potential for adaptation, and design effective networks of protected areas. In marine environments, dispersal is often accomplished by larvae. At higher temperatures, larvae develop faster, but suffer higher mortality, making the effect of temperature on dispersal difficult to predict. Here, we experimentally calibrate the effect of temperature on larval survival and settlement in a dynamic model of coral dispersal. Our findings imply that most reefs globally will experience several-fold increases in local retention of larvae due to ocean warming. This increase will be particularly pronounced for reefs with mean water residence times comparable to the time required for species to become competent to settle. Higher local retention rates strengthen the link between abundance and recruitment at the reef scale, suggesting that populations will be more responsive to local conservation actions. Higher rates of local retention and mortality will weaken connectivity between populations, and thus potentially retard recovery following severe disturbances that substantially deplete local populations. Conversely, on isolated reefs that are dependent on replenishment from local broodstock, increases in local retention may hasten recovery.