Experiments have shown that ocean acidification due to rising atmospheric carbon dioxide concentrations has deleterious effects on the performance of many marine organisms. However, few empirical or modelling studies have addressed the long-term consequences of ocean acidification for marine ecosystems. Here we show that as pH declines from 8.1 to 7.8 (the change expected if atmospheric carbon dioxide concentrations increase from 390 to 750ppm, consistent with some scenarios for the end of this century) some organisms benefit, but many more lose out. We investigated coral reefs, seagrasses and sediments that are acclimatized to low pH at three cool and shallow volcanic carbon dioxide seeps in Papua New Guinea. At reduced pH, we observed reductions in coral diversity, recruitment and abundances of structurally complex framework builders, and shifts in competitive interactions between taxa. However, coral cover remained constant between pH 8.1 and ~7.8, because massive Porites corals established dominance over structural corals, despite low rates of calcification. Reef development ceased below pH 7.7. Our empirical data from this unique field setting confirm model predictions that ocean acidification, together with temperature stress, will probably lead to severely reduced diversity, structural complexity and resilience of Indo-Pacific coral reefs within this century.