To test the hypothesis that terrestrial runoff affects the functions of calcareous sediments in coral reefs and hampers the development of corals, we analysed calcareous sediments with different levels of bound phosphate, collected from reef areas of Okinawajima, Japan. We confirmed that phosphate bound to calcareous sediments were readily released into ambient seawater, resulting in much higher concentrations of phosphorous in seawater from heavily polluted areas (4.3 to 19.0 µM as compared with < 0.096 μM in natural ambient seawater). Additionally, we examined the effect of phosphate released from calcareous sediments on the development of Acropora digitifera coral juveniles. We found that high phosphate concentrations in seawater clearly inhibit skeletal formation of coral juveniles. Our results demonstrate that calcareous sediments in reef areas play a crucial role in mediating the impact of terrestrial runoff on corals by storing and releasing phosphate in seawater.