Non-native species can become deleterious or potentially beneficial as components of novel ecosystems. The non-native red macroalga Gracilaria vermiculophylla may provide nursery habitat where eelgrass Zostera marina has been extirpated in Chesapeake Bay. A mensurative experiment was conducted monthly May-October 2013 and 2014 in the York River, Chesapeake Bay, to evaluate hypotheses that Gracilaria (1) can compensate for the loss of seagrass nurseries by colonizing habitats where seagrass has been eliminated by environmental stress, and (2) is utilized by juvenile blue crabs (Callinectes sapidus) as nursery habitat. We quantified Gracilaria presence, percent cover, and biomass as a function of region (upriver, midriver, and downriver) and seagrass presence or absence using stratified random sampling, 20-m transects, and 0.0625-m2 quadrats. Gracilaria volume was measured and converted to dry weight. Effects of the factors and covariates temperature, salinity, dissolved oxygen, month, and year were analyzed using generalized linear models. Juvenile blue crab density was quantified in summer 2013 using suction sampling in Gracilaria and seagrass. A model with the collective effect of region and seagrass presence or absence (downriver seagrass, downriver unvegetated bottom, midriver unvegetated bottom) best predicted Gracilaria abundance. Gracilaria presence, percent cover, and biomass were highest in downriver seagrass, followed by downriver unvegetated bottom, and then midriver unvegetated bottom, where seagrass has been extirpated, supporting hypothesis (1). Gracilaria did not occur upriver, likely due to a lack of recruitment. Seagrass and Gracilaria housed similar densities of juvenile blue crabs, supporting hypothesis (2). We estimated that a single 40-ha cove system with Gracilaria could house 200,000 juvenile crabs as would a single 2.4-ha seagrass bed. Consequently, the numerous midriver and downriver cove systems in the York River could support millions of young juvenile blue crabs and thereby compensate for the loss of seagrass in the river and in other areas of Chesapeake Bay. At present, Gracilaria has no widespread negative impacts on seagrass in the York River or most regions of Chesapeake Bay, likely because percent cover and biomass are not excessively high at present. We posit that Gracilaria has become an important alternative nursery habitat for the blue crab in Chesapeake Bay and can potentially mitigate impacts of climate change on seagrass nursery habitats.