The life cycle of many sessile marine invertebrates includes a dispersive planktonic larval stage whose ability to find a suitable habitat in which to settle and transform into benthic adults is crucial to maximize fitness. To facilitate this process, invertebrate larvae commonly respond to habitat-related chemical cues to guide the search for an appropriate environment. Furthermore, small-scale hydrodynamic conditions affect dispersal of chemical cues, as well as swimming behavior of invertebrate larvae and encounter with potential habitats. Shipworms within the family Teredinidae are dependent on terrestrially derived wood in order to complete their life cycle, but very little is known about the cues and processes that promote settlement. We investigated the potential for remote detection of settling substrate via waterborne chemical cues in teredinid larvae through a combination of empirical field and laboratory flume experiments. Natural populations of teredinid larvae were significantly more abundant close to wooden structures enclosed in plankton net compared to empty control nets, clearly showing that shipworm larvae can sense and respond to chemical cues associated with suitable settling substrate in the field. However, the flume experiments, using ecologically relevant flow velocities, showed that the boundary layer around experimental wooden panels was thin and that the mean flow velocity exceeded larval swimming velocity approximately 5 mm (≈ 25 larval body lengths) from the panel surface. Therefore, we conclude that the scope for remote detection of waterborne cues is limited and that the likely explanation for the higher abundance of shipworm larvae associated with the wooden panels in the field is a response to a cue during or after attachment on, or very near, the substrate. Waterborne cues probably guide the larva in its decision to remain attached and settle, or to detach and continue swimming and drifting until the next encounter with a solid substrate.