Marine heatwaves have been documented around the world, causing widespread mortality of numerous benthic species on shallow reefs (< 15 m depth). Deeper habitats are hypothesized to be a potential refuge from environmental extremes, though we have little understanding of the response of deeper benthic communities to marine heatwaves. Here, we show how increasing depth moderates the response of seaweed- and coral-dominated benthic communities to an extreme marine heatwave across a subtropical-temperate biogeographical transition zone. Benthic community composition and key habitat-building species were characterised across three depths (15, 25 and 40 m) before and several times after the 2011 Western Australian marine heatwave to assess resistance during and recovery after the heatwave. We found high natural variability in benthic community composition along the biogeographic transition zone and across depths with a clear shift in the composition after the marine heatwave in shallow (15 m) sites but a lot less in deeper communities (40 m). Most importantly, key habitat-building seaweeds such as Ecklonia radiata, and Syctothalia dorycarpa, which had catastrophic losses on shallow reefs, remained and were less affected in deeper communities. Evidently, deep reefs have the potential to act as a refuge during marine heatwaves for the foundation species of shallow reefs in this region.