Macroalgal canopies modify their surrounding environment and thereby influence the structure of associated algal assemblages. Canopies can modify many factors that can be hard to separate and, consequently, the importance of individual factors often remains unknown. Experiments were carried out to test the hypotheses that Ecklonia radiata canopies modify light, sediment cover and water motion, and that each of these physical factors separately influence the assemblage of associated foliose algae. We measured light, sediment cover and water motion across six naturally occurring E. radiata densities and found a reduction in light and sediment cover as kelp density increased. The outcome for water motion was inconclusive. We also manipulated each of these three factors, while controlling for the two others, to determine the separate effects of light, sediment cover and water motion on the assemblage of foliose algae. Reduction in light had a strong effect on the foliose assemblage, reducing species richness and biomass. Reduction in sediment cover and water motion did not cause separate effects at the level of the assemblage, but the biomass of individual species of foliose algae indicated both positive and negative effects. We conclude that E. radiata canopies at Marmion, Western Australia, modify at least two factors of their physical environment, light and sediment cover. However, only light is modified to an extent where it has effects at the assemblage-level because, in contrast to the effects of sediment cover and water motion, the direction of responses are consistent among individual species of algae.