Studying the mechanisms that enable coral populations to inhabit spatially varying thermal environments can help evaluate how they will respond in time to the effects of global climate change and elucidate the evolutionary forces that enable or constrain adaptation. Inshore reefs in the Florida Keys experience higher temperatures than offshore reefs for prolonged periods during the summer. We conducted a common garden experiment with heat stress as our selective agent to test for local thermal adaptation in corals from inshore and offshore reefs. We show that inshore corals are more tolerant of a 6-week temperature stress than offshore corals. Compared with inshore corals, offshore corals in the 31 °C treatment showed significantly elevated bleaching levels concomitant with a tendency towards reduced growth. In addition, dinoflagellate symbionts (Symbiodinium sp.) of offshore corals exhibited reduced photosynthetic efficiency. We did not detect differences in the frequencies of major (>5%) haplotypes comprising Symbiodinium communities hosted by inshore and offshore corals, nor did we observe frequency shifts (‘shuffling’) in response to thermal stress. Instead, coral host populations showed significant genetic divergence between inshore and offshore reefs, suggesting that in Porites astreoides, the coral host might play a prominent role in holobiont thermotolerance. Our results demonstrate that coral populations inhabiting reefs <10-km apart can exhibit substantial differences in their physiological response to thermal stress, which could impact their population dynamics under climate change.