Benthic cyanobacterial mats (BCMs) are impacting coral reefs worldwide. However, the factors and mechanisms driving their proliferation are unclear. We conducted a multi-year survey around the Caribbean island of Curaçao, which revealed highest BCM abundance on sheltered reefs close to urbanised areas. Reefs with high BCM abundance were also characterised by high benthic cover of macroalgae and low cover of corals. Nutrient concentrations in the water-column were consistently low, but markedly increased just above substrata (both sandy and hard) covered with BCMs. This was true for sites with both high and low BCM coverage, suggesting that BCM growth is stimulated by a localised, substrate-linked release of nutrients from the microbial degradation of organic matter. This hypothesis was supported by a higher organic content in sediments on reefs with high BCM coverage, and by an in situ experiment which showed that BCMs grew within days on sediments enriched with organic matter (Spirulina). We propose that nutrient runoff from urbanised areas stimulates phototrophic blooms and enhances organic matter concentrations on the reef. This organic matter is transported by currents and settles on the seabed at sites with low hydrodynamics. Subsequently, nutrients released from the organic matter degradation fuel the growth of BCMs. Improved management of nutrients generated on land should lower organic loading of sediments and other benthos (e.g. turf and macroalgae) to reduce BCM proliferation on coral reefs.