Habitat loss is jeopardizing marine biodiversity. In the Mediterranean Sea, the algal forests of Cystoseira spp. form one of the most complex, productive and vulnerable shallow-water habitats. These forests are rapidly regressing with negative impact on the associated biodiversity, and potential consequences in terms of ecosystem functioning. Here, by comparing healthy Cystoseira forests and barren grounds (i.e., habitats where the macroalgal forests disappeared), we assessed the effects of habitat loss on meiofaunal and nematode biodiversity, and on some ecosystem functions (here measured in terms of prokaryotic and meiofaunal biomass). Overall, our results suggest that the loss of Cystoseira forests and the consequent barren formation is associated with the loss of meiofaunal higher taxa and a decrease of nematode biodiversity, leading to the collapse of the microbial and meiofaunal variables of ecosystem functions. We conclude that, given the very limited resilience of these ecosystems, active restoration of these vulnerable habitats is needed, in order to recover their biodiversity, ecosystem functions and associated services.