We have identified benthic recruitment habitats and nursery grounds of the American lobster Homarus americanus Milne Edwards in the coastal Gulf of Maine, USA, by systematically censusing subtidal sediment, cobble, and ledge substrata. We distinguish lobsters between settlement size (5 mm carapace length (CL) to ca 40 mm CL as the 'early benthic phase' (EBP) because they are ecologically and behaviorally distinct from larger lobsters. EBP lobsters are cryptic and apparently restricted to shelter-providing habitats (primarily cobble substratum) in coastal Gulf of Maine. In these habitats we found average population densities of EBP lobsters as high as 6.9 m-2. EBP lobsters were virtually absent from ledge and sedimentary substrata devoid of vegetation although larger lobsters are commonly found there. It is possible that the requirement for shelter-providing substrata by this life phase creates a natural demographic 'bottleneck' to benthic recruitment for the species. Prime cobble recruitment habitat is relatively rare and comprises ca 11 % of the 60.2 km of shoreline at our study area in midcoast Maine. If this low availability of cobble exists throughout the Gulf of Maine, as other studies indicate, it could limit lobster production potential. We verified the geographic extent of recruitment to cobble habitats censused in 3 of 4 regions spanning ca 300 km of the coastal Gulf of Maine (from Nahant, Massachusetts to Swans Island, Maine). Early benthic phase lobsters were absent from cobble censused in the northeastern extreme of our survey (Swans Island). This pattern is consistent with earlier speculation that relatively cool water temperatures may limit larval settlement in this region.