The mud crab Scylla serrata (Forsk嬬 1775) (Portunidae) is a commercial species in the Indo-West-Pacific. Despite its high fishery value, the microhabitat of its early juvenile stages remains unknown. We studied microhabitat use by the 'early benthic stage' (EBS, between 3 and 30 mm carapace width, CW) at two sites in eastern Australia by two types of artificial benthic collectors and baited traps. 92% of EBS mud crabs were captured in muddy areas, compared to 8% on sandy habitats. The majority of the EBS mud crabs (87%) was found in intertidal areas within the mangrove fringe, only few individuals (13%) were found on unvegetated mud flats seawards to the mangroves. EBS from the mudflat (including first instars of 3-4 mm CW) were significantly smaller (p<0.001) than those from the mangrove habitat. This indicates an active migration from the mud flat towards the mangrove fringe as the crabs grow. The recapture of mud crabs in close proximity to their tagging site at the mangrove fringe suggest that EBS-crabs have a small home range. Cannibalism is considered a major driver in the distribution patterns of EBS mud crabs, which may explain, why EBS-crabs stay at the more sheltered site near the mangrove fringe. By identifying the microhabitat of the critical early benthic stages of S. serrata in eastern Australia, our findings may contribute to the development of appropriate management and conservation strategies for this commercially important species.