The broad spectrum of anthropogenic pressures on many of the world's coastal bays and estuaries rarely act in isolation, yet few studies have directly addressed the interactive effects of multiple pressures. Port Phillip Bay in southeastern Australia is a semi-enclosed bay in which nutrient management is a major concern. In recent years it has been heavily invaded by marine pests. We manipulated the density of one such invader, the European fanworm Sabella spallanzanii, and showed that it causes changes in the composition of macrofauna in the surrounding sediments, provides habitat for epibiota (both fauna and flora) on Sabella tubes, and reduces the biomass of microphytobenthos on the surrounding sediments. Of greatest concern, however, was the indirect impact on nutrient cycling. We suggest that the impacts on nutrient cycling are largely due to the feeding of Sabella and the epifauna on its tubes, capturing organic N before it reaches the sediment, excreting it back up into the water column as NH4, thereby bypassing sedimentary processes such as denitrification. Most notably, the efficiency of denitrification, the key ecosystem process that permanently removes N from the system, fell by 37-53 % in the presence of Sabella. Importantly though, this study also demonstrated significant spatial variability in fauna, geochemistry and the magnitude of Sabella effects. Given that the effect of Sabella is also likely to vary in time and with changes in density, all of these sources of variability need to be considered when incorporating the effects of Sabella in nutrient management strategies.