Coral-algal phase shifts in which coral cover declines to low levels and is replaced by algae have often been documented on coral reefs worldwide. This has motivated coral reef management responses that include restriction and regulation of fishing, e.g. herbivorous fish species. However, there is evidence that eutrophication and sedimentation can be at least as important as a reduction in herbivory in causing phase shifts. These threats arise from coastal development leading to increased nutrient and sediment loads, which stimulate algal growth and negatively impact corals respectively. Here, we first present results of a dynamic process-based model demonstrating that in addition to overharvesting of herbivorous fish, bottom-up processes have the potential to precipitate coral-algal phase shifts on Mesoamerican reefs. We then provide an empirical example that exemplifies this on coral reefs off Mahahual in Mexico, where a shift from coral to algal dominance occurred over 14 years, during which there was little change in herbivore biomass but considerable development of tourist infrastructure. Our results indicate that coastal development can compromise the resilience of coral reefs and that watershed and coastal zone management together with the maintenance of functional levels of fish herbivory are critical for the persistence of coral reefs in Mesoamerica.