We studied reactive oxygen metabolism in natural populations of the brown alga Dictyota dichotoma growing on coral reefs on the west coast of Barbados in March 2000. Algae from deep water (27 to 30 m) had lower dark respiration (0.08 cf. 0.21 mmole O2 cm−2 h−1), light compensation point (7 cf. 18 mmole photons m−2 s−1) and gross light‐saturated photosynthesis (0.44 cf. 0.68 mmole O2 cm−2 h−1) than the same species from shallow (2 to 3 m) water. Compared to shallow water algae, those from 27 to 30 m were more susceptible to photoinhibition, produced more reactive oxygen (as measured by dichlorofluorescein production) and suffered lipid peroxidation when exposed to surface solar radiation. These data could not be explained by differences in activities of reactive oxygen processing enzymes. Although activities of ascorbate peroxidase (APX) were higher in shallow water algae, the opposite was true for superoxide dismutase (SOD) and catalase. In situ reactive oxygen production in shallow water D. dichotoma varied over the course of the day on both a sunny and overcast day, and was proportional to incident light and photosynthetic electron turnover rate (ETR) determined with a submersible modulated fluorometer. The natural population did not appear to experience lipid peroxidation. Activities of SOD and APX remained constant over the light period, whereas catalase declined in the afternoon on the sunny day, but not on the overcast day. Overall, our data demonstrate that algae produce reactive oxygen in nature under non‐stressed conditions and moderate light (< 300 mmole photons m−2 s−1) and that this occurs independently of the activity of catalase.