Natural selection can maintain and help form species across different habitats, even when dispersal is high. Selection against inferior migrants (immigrant inviability) acts when locally adapted populations suffer high mortality on dispersal to unsuitable habitats. Habitat-specific populations undergoing divergent selection via immigrant inviability should thus show (1) a change in the ratio of adapted to nonadapted individuals among age/size classes and (2) a cline (defined by the environmental gradient) as selection counterbalances migration. Here we examine the frequencies of two depth-segregated lineages in juveniles and adults of a Caribbean octocoral, Eunicea flexuosa. Distributions of the two lineages in both shallow and deep environments were more distinct when inferred from adults than juveniles. Despite broad larval dispersal, we also found an extremely narrow hybrid zone (<100 m), with coincident clines for molecular and morphological characters of the host coral and its algal symbiont. Effective dispersal estimates derived from the hybrid zone are remarkably small (<20 m) for a broadcast spawner. The large selection coefficient against mismatched genotypes derived from cohort data is consistent with that from field transplant experiments. Narrow hybrid zones and limited effective dispersal may be a common outcome of long periods of postsettlement, prereproductive selection across steep ecological gradients. Strong diversifying selection provides a mechanism to explain the prevalence of depth-segregated sibling species in the sea.