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Animals often change their habitat throughout ontogeny; yet, the triggers for habitat transitions and how these correlate with developmental changes – e.g. physiological, morphological and behavioural – remain largely unknown. Here, we investigated how ontogenetic changes in body coloration and of the visual system relate to habitat transitions in a coral reef fish. Adult dusky dottybacks, Pseudochromis fuscus, are aggressive mimics that change colour to imitate various fishes in their surroundings; however, little is known about the early life stages of this fish. Using a developmental time series in combination with the examination of wild-caught specimens, we revealed that dottybacks change colour twice during development: (i) nearly translucent cryptic pelagic larvae change to a grey camouflage coloration when settling on coral reefs; and (ii) juveniles change to mimic yellow- or brown-coloured fishes …