The importance of open, sandy substrate adjacent to coral reefs as habitat and a food source for fishes has been little studied in most shallow tropical waters in the Pacific, including Hawai'i. In this study, in Hanalei Bay, Hiwai'i, we identified and quantified the major invertebrate fauna (larger than 0.5 mm) in the well-characterized sands adjoining the shallow fringing reefs. Concurrently, we identified the fish species that seemed to make substantial use of these sand habitats, estimated their density there, sampled their gut contents to examine trophic links with the sand habitat, and made other observations and collections to determine the times, locations, and types of activity there. A variety of (mostly small) polychaeres were dominant in the sediments at most sampling stations, along with many small crustaceans (e.g., amphipods, isopods, ostracods, and small shrimps) and fair numbers of mollusks (especially bivalves) and small echinoids. Fish guts examined contained ???77% of the total number of benthic taxa collected, including nearly all those just listed. However, fish consumption was selective, and the larger shrimps, crabs, and small cryptic fishes were dominant in the diets of most of the numerous predator taxa. Diets of benthic-feeding fishes showed relatively low specific overlap. The fish fauna in this area included substrate-indifferent pelagics, species with various degrees of reef relatedness, reef-restricted species, and (at the other extreme) permanent cryptic sand dwellers. Data on occurrence and movements of fishes indicated that a band of sandy substrate several tens of meters wide next to the reef was an active area for fishes, and activity was considerably different at different times of day and for fish of different ages. These results imply an important trophic role for the benthos in these near-reef habitats in support of reef-associated fishes.