To test whether near-bed hydrodynamics modify larval settlement, field and flume experiments were conducted where larval settlement was compared between microdepositional environments (small depressions) and non-trapping environments (flush treatments). Flume flow simulations with the polychaete Capitella sp. I and the bivalve Mulinia lateralis demonstrated that although larvae of both species were generally able to actively select a high-organic sediment over a low-organic alternative with a comparable grain size, elevated densities of both species were observed in depressions for a given sediment treatment. In field experiments carried out in Buzzards Bay, Massachusetts, significantly higher densities of Mediomastus ambiseta juveniles, spionid polychaete juveniles, bivalves, gastropod larvae, and nemerteans were observed in depressions compared with flush treatments over 5 experimental periods (3-4 days each) during the summer of 1990, suggesting that larvae were passively ntrained in depressions. These experiments suggest that near-bed hydrodynamics may modify settlement at some scales, and that both active and passive processes may determine larval distributions in shallow-water, muddy habitats. In a deep- sea habitat near St. Croix, densities of colonizers in flush treatments were generally higher than in comparable depression treatments, suggesting that passive entrainment did not occur and habitat selection was highly active.