The green algae of the genus Halimeda Lamouroux (Chlorophyta, Bryopsidales) and the encrusting loose-lying red coralline algae (Rhodophyta, Corallinales) known as rhodoliths are abundant and widespread in all oceans. They significantly contribute to primary productivity while alive and production of CaCO3 rich sediment materials on death and decay. Carbonate rich sediments are important components in the formation of Coral Reefs and as sources of inorganic carbon (influx) in tropical and subtropical marine environments. This study was initiated to attempt to assess their ecological significance with regard to the above mentioned roles in a tropical lagoon system, Chwaka bay (Indian Ocean), and to address some specific objectives on the genus Halimeda (Chlorophyta, Bryopsidales) and the loose-lying coralline algae (rhodoliths). Four Halimeda species were taxonomically identified in the area. The species identified are the most common inhabitants of the world’s tropical and subtropical marine environments, and no new species were encountered. Using Satellite remote sensing technique in combination with the percentage cover data obtained from ground-truthing field work conducted in the area using quadrants, the spatial and seasonal changes of Submerged Aquatic Macrophytes (SAV) were evaluated. SAV percentage cover through ground-truthing was; 24.4% seagrass, 16% mixed Halimeda spp., 5.3% other macroalgae species while 54.3% remained unvegetated. No significant changes in SAV cover was observed for the period investigated, except in some smaller regions where both loss and gains occurred. The structural complexity of SAV (shoot density, above-ground biomass and canopy height) for most common seagrass communities from six meadows, dominated by Thalassia hemprichii, Enhalus acoroides and Thalassodendron ciliatum, as well as mixed meadows, were estimated and evaluated. Relative growth of Halimeda species was up to 1 segment tip-1 day-1. The number of segments produced was highest in hot season. Differences between the numbers of segments produced were insignificant between the two sites investigated. The C/N ratios obtained probably shows that Halimeda species experience nitrogen limitation in the area and may be a factor among others responsible for the varying growth of species obtained. However, this can be a normal ratio for calcified algae due to high CaCO3 content in their tissues. Standing biomass of mixed Halimeda species averaged between 500-600 g dw m-2 over the bay, while the mean cover in Halimeda meadows was about 1560 g dw m-2. Carbonate production in Halimeda beds varied between 17-57 g CaCO3 m-2 day-1 and for H. macroloba between 12-91 g CaCO3 m-2 day-1. This indicates a high annual input of carbonate in the area. Decomposition of Halimeda using litter bag experiments at site I and II gave a decomposition rate (k) of 0.0064 and k = 0.0091 day-1 ash-free dry weight (AFDW) respectively. Hence it would take 76-103 days for 50% of the materials to decompose. Adding inhibitors or varying the pH significantly reduced inorganic carbon uptake, and demonstrated that the two photosynthesis and calcification were linked. Addition of TRIS strongly inhibited photosynthesis but not calcification, suggesting the involvement of proton pumps in the localized low pH acid zones and high pH basic zones. The high pH zones were maintained by the proton pumps maintaining high calcification, while TRIS was competing for proton uptake from acid zones causing photosynthesis to drop. Rhodoliths were found to maintain high productivity at a temperature of 34oC, and even at 37oC. It is therefore concluded that, rhodoliths are well adapted to high temperatures and excess light, a behaviour which enables them to thrive even in intertidal areas