Extreme climatic events can trigger sudden but often long‐lasting impacts in ecosystems by causing near to complete mortality of foundation (habitat‐forming) species. The magnitude and frequency of such events are expected to rise due to anthropogenic climate change, but the impacts that such events have on many foundation species and the ecosystems that they support remains poorly understood. In many cases, manipulative experimentation is extremely challenging and rarely feasible at a large scale. In late 2015 to early 2016, an extensive area of mangrove forest along ∼ 1000 km of coastline in the Gulf of Carpentaria, Australia, experienced severe dieback, an event associated with climatic extremes. To assess the effect this dieback event had on the mangrove ecosystem, we assessed benthic faunal assemblages and food web structure using stable carbon and nitrogen isotopes in a comparative experiment of impacted forest and adjacent unimpacted forest. Eighteen months after the dieback, the forest that suffered dieback contained significantly fewer crabs that rely on mangrove litter food source but more crabs that rely on microphytobenthos food source than the unimpacted forest. However, the infaunal biomass was largely unaffected by the mortality effect. This is most likely because microphytobenthos was largely unaffected and consequently, this buffered the food web responses. However, overall, the habitat value for mangrove ecosystem services most likely decreased due to lower physical habitat complexity following tree mortality. Longer‐term monitoring could lead to better understanding of biological effects of this extreme event and underlying biological mechanisms that drive changes and recovery.