While evidence is mounting that larval reef fish are active participants in the process of dispersal and settlement, the sensory and behavioural mechanisms by which these fishes disperse and return from their oceanic phase to the reefs remain unknown. On One Tree Island (Great Barrier Reef, Australia), we tested freshly collected animals in a large choice-flume on the shore. Here, we present the first evidence that larval reef fish (primarily apogonids) approaching the time of settle- ment are capable of detecting differences between ocean and lagoon water and prefer lagoon water. We also demonstrate that they sniff actively with well-innervated noses and that attraction to lagoon water was not affected by warmer or colder temperatures. We conclude that they used chemical sig- nals to orient toward lagoon water. Finally, we describe ebb tide plumes of lagoon water that extend many kilometers from reefs. Such plumes could provide chemosensory cues for dispersal and settle- ment stages of reef fish as they develop swimming efficiency. We argue that fishes may imprint to reef odour as embryos and/or early larvae and that this could facilitate both retention near the natal reef and navigation toward reefs from greater distances.