Background: Coral reefs degrade globally at an alarming rate, with benthic algae often replacing corals. However, the extent to which benthic algae contribute to coral mortality, and the potential mechanisms involved, remain disputed. Recent laboratory studies suggested that algae kill corals by inducing hypoxia on the coral surface, through stimulated microbial respiration. Methods/Findings: We examined the main premise of this hypothesis by measuring in situ oxygen microenvironments at the contact interface between the massive coral Porites spp. and turf algae, and between Porites spp. and crustose coralline algae (CCA). Oxygen levels at the interface were similar to healthy coral tissue and ranged between 300–400 mM during the day. At night, the interface was hypoxic (,70 mM) in coral-turf interactions and close to anoxic (,2 mM) in coral-CCA interactions, but these values were not significantly different from healthy tissue. The diffusive boundary layer (DBL) was about three times thicker at the interface than above healthy tissue, due to a depression in the local topography. A numerical model, developed to analyze the oxygen profiles above the irregular interface, revealed strongly reduced net photosynthesis and dark respiration rates at the coral-algal interface compared to unaffected tissue during the day and at night, respectively. Conclusions/Significance: Our results showed that hypoxia was not a consistent feature in the microenvironment of the coral-algal interface under in situ conditions. Therefore, hypoxia alone is unlikely to be the cause of coral mortality. Due to the modified topography, the interaction zone is distinguished by a thicker diffusive boundary layer, which limits the local metabolic activity and likely promotes accumulation of potentially harmful metabolic products (e.g., allelochemicals and protons). Our study highlights the importance of mass transfer phenomena and the need for direct in situ measurements of microenvironmental conditions in studies on coral stress.