Many seaweeds and terrestrial plants induce chemical defences in response to herbivory, but whether they induce chemical defences against competitors (allelopathy) remains poorly understood. We evaluated whether two tropical seaweeds induce allelopathy in response to competition with a reef-building coral. We also assessed the effects of competition on seaweed growth and seaweed chemical defence against herbivores. Following 8 days of competition with the coral Porites cylindrica, the chemically rich seaweed Galaxaura filamentosa induced increased allelochemicals and became nearly twice as damaging to the coral. However, it also experienced significantly reduced growth and increased palatability to herbivores (because of reduced chemical defences). Under the same conditions, the seaweed Sargassum polycystum did not induce allelopathy and did not experience a change in growth or palatability. This is the first demonstration of induced allelopathy in a seaweed, or of competitors reducing seaweed chemical defences against herbivores. Our results suggest that the chemical ecology of coral-seaweed-herbivore interactions can be complex and nuanced, highlighting the need to incorporate greater ecological complexity into the study of chemical defence.