Caulerpa taxifolia, an invasive species elsewhere in the world, is native to Moreton Bay where its distribution has been increasing in recent years. In Australia, dense beds of C. taxifolia are predominantly found in areas of low light and high nutrients (low water quality). Monitoring data from Moreton Bay suggests that native C. taxifolia is not directly replacing seagrass, but that there is a successional trend of seagrass loss and subsequent C. taxifolia colonization. The current study examined responses of C. taxifolia in relation to changes in environmental conditions using ambient water quality and a light/nutrient manipulative experiment. In the ambient water quality experiment we found that C. taxifolia grew significantly faster in areas with higher light (lower turbidity). The manipulative experiment demonstrated that nutrients stimulate C. taxifolia growth, however, light availability and seasonality appear to influence the response of C. taxifolia growth to nutrients in Moreton Bay. These findings suggest that C. taxifolia is unlikely to colonize seagrass beds in areas with high light and low nutrients; however, in areas with moderate light and moderate to high nutrients C. taxifolia and seagrass are likely to coexist.