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Few manipulative experiments that explicitly test the relationship between biodiversity and ecosystem function have focussed on regenerative processes such as decomposition and nutrient cycling. Of the studies that have taken place, most have concentrated on the effects of leaf litter diversity rather than the effects of consumer diversity on decomposition. In the present study, we established an in-situ mesocosm experiment on an intertidal mudflat in the Ythan Estuary, Scotland, to investigate the interactive effects of consumer diversity, resource diversity and microbial activity on algal consumption and decomposition. We assembled communities of three commonly occurring macrofaunal species (Hediste diversicolor, Hydrobia ulvae and Littorina littorea) in monoculture and all possible combinations of two and three species mixtures and supplied them with single vs two-species mixtures of the algae Fucus spiralis and Ulva intestinalis. Further, we also investigated whether algal decomposition changes nutrient remineralisation within the sediment by determining the C:N ratio of the surficial sediment. Data were analysed using extended linear regression with generalized least squares estimation to characterise the variance structure. We found that consumer species diversity effects are best explained by compositional effects and that species richness per se may not be the single most important determinant of resource use and decomposition in this community. Algal identity and invertebrate identity effects underpin the observed response and reflect species-specific traits associated with algal consumption and processing. The role of the microbial community is comparatively weak, but strongly linked to faunal activities and behaviour. The C:N ratio of the sediment increased with consumer species richness, indicating increased mineralisation in more diverse communities. Overall, our results suggest that although consumer species richness effects per se are weak, decomposition and subsequent incorporation of resources is nevertheless dependent on the composition of the decomposer community, which, in turn, has important implications for biogeochemical nutrient cycling in marine coastal habitats.