Coral reefs provide a number of ecosystem services including coastal defense from storms, the generation of building materials, and fisheries. It is increasingly clear that the management of reef resources requires an ecosystem approach in which extractive activities are weighed against the needs of the ecosystem and its functions rather than solely those of the fishery. Here, I use a spatially explicit simulation model of a Caribbean coral reef to examine the ecosystem requirements for grazing which is primarily conducted by parrotfishes (Scaridae). The model allows the impact of fishing grazers to be assessed in the wider context of other ecosystem processes including coral–algal competition, hurricanes, and mass extinction of the herbivorous urchin Diadema antillarum. Using a new analytical model of scarid grazing, it is estimated that parrotfishes can only maintain between 10% and 30% of a structurally complex forereef in a grazed state. Predictions from this grazing model were then incorporated into a broader simulation model of the ecosystem. Simulations predict that scarid grazing is unable to maintain high levels of coral cover (≥30%) when severe hurricanes occur on a decadal basis, such as occurs in parts of the northern Caribbean. However, reefs can withstand such intense disturbance when grazing is undertaken by both scarids and the urchin Diadema. Scarid grazing is predicted to allow recovery from hurricanes when their incidence falls to 20 years or less (e.g., most of Central and South America). Sensitivity analyses revealed that scarid grazing had the most acute impact on model behavior, and depletion led to the emergence of a stable, algal-dominated community state. Under conditions of heavy grazer depletion, coral cover was predicted to decline rapidly from an initial level of 30% to less than 1% within 40 years, even when hurricane frequency was low at 60 years. Depleted grazers caused a population bottleneck in juvenile corals in which algal overgrowth caused elevated levels of postsettlement mortality and resulted in a bimodal distribution of coral sizes. Several new hypotheses were generated including a region-wide change in the spatial heterogeneity of coral reefs following extinction of Diadema. The management of parrotfishes on Caribbean reefs is usually approached implicitly through no-take marine reserves. The model predicts that depletion of grazers in nonreserve areas can severely limit coral accretion. Other studies have shown that low coral accretion can reduce the structural complexity and therefore quality of the reef habitat for many organisms. A speculative yet rational inference from the model is that failure to manage scarid populations outside reserves will have a profoundly negative impact on the functioning of the reserve system and status of non-reserve reefs.