Seagrass beds are common features of coastal ecosystems worldwide, and their associated infauna are often more productive and diverse than in unvegetated habitats. Little is known, however, about the ecology of meiofaunal communities living in seagrass sediments. We compared the abundance and biomass of sediment meiofauna inside and outside an intertidal Zostera muelleri bed in southern New Zealand to assess the impact of seagrass cover on meiofaunal distribution. Nematode community structure, diversity, and feeding groups were also compared between habitats and sediment depths (0–2, 2–5 and 5–10 cm) to evaluate the effect of seagrass on nematode communities. Meiofaunal biomass was significantly higher inside than outside the Z. muelleri bed, but secondary productivity inside the bed is likely to have been limited by the availability of labile organic matter. There were significant differences in nematode community structure between unvegetated, sparsely vegetated, and densely vegetated sites (102 m scale), as well as between sediment depths (cm scale). No significant differences were found in depth-integrated (0–10 cm) nematode diversity between sites, but vertical gradients in diversity differed between vegetated and unvegetated sites. Epistrate feeders were the most common feeding group in unvegetated sediments whereas most feeding groups were common inside the seagrass bed. Findings from this study indicate that seagrass beds can have a marked impact on infaunal structure and function over small spatial scales through their effect on sediment characteristics and organic matter input. Some unexpected trends observed in the present study, i.e. low meiofaunal biomass at the vegetated sites, and lower abundance of copepods inside than outside the seagrass bed, suggest that the nature of seagrass–invertebrate interactions may depend on habitat characteristics and the identity and ecology of species considered.