ABSTRACT. I conducted a study of larval fishes in the Gulf of California, Mexico, with 3 objectives: identify the families that utilize the near-reef habitat throughout development; evaluate distributions of reef fishes for evidence of larval retention; and relate larval distributions of reef fishes to egg type and morphology of hatchlings. Analyses were based on 165 light-trap and plankton-net samples collected -1, 20, and 100 m off reefs during the summers of 1989 and 1990, and on previous offshore surveys. Sixteen families accounted for >93 % of all larvae collected near reefs, and only these families were considered further. At least 11 families, including epipelagic, sandy-bottom, and reef fishes, appeared to utilize the near-reef habitat throughout development. In addition, larval retention may have occurred in at least 5 of the reef fish families (Bythitidae, Chaenopsidae, Gobiesocidae, Labrisomidae, Tripterygiidae). Evidence for this included the presence of all larval size classes over reefs, high concentrations of larvae at 1 m and/or 20 m stations that decreased by 72.0 to 99.9 O/o at 100 m stations, and absence or rarity in offshore surveys. Larvae of some gobiids may also have been retained, but distributions varied within the family. Larvae of other reef fish families (Balistidae, Blenniidae, Pomacentridae, and perhaps Haemulidae) appeared to disperse away from reefs. All families with evidence of retention spawned non-pelagic eggs and had well-developed hatchlings, but the reverse was not true. This suggests that these traits provide the opportunity for retention, but other taxon-specific factors determine whether such a distribution is realized.