We studied effects of a major oil spill in Panama on injury, regeneration and growth of subtidal reef corals over 5 yr. Corals exhibited much higher levels of injury, faster regeneration rates and slower growth on heavily oiled reefs. Concentrations of hydrocarbons in reef sediments were significantly positively correlated with amounts of coral injury and significantly negatively correlated with coral growth. The probable cause of persistently high levels of coral injury is chronic exposure to sediments mixed with partially degraded oil that are exported from mangroves onto adjacent reefs. Injury apparently results in a reallocation of resources to regeneration and consequently decreased investment in fecundity and growth. There was no evidence of coral recovery 5 yr after the oil spill.