Kelp habitats provide food, refuge, and enhance the recruitment of commercially important marine invertebrates. The southern rock lobster, Jasus edwardsii, supports valuable fisheries in southern Australia and New Zealand. Kelp habitats once covered large areas of inshore reef around Tasmania, Australia, but coverage has reduced over the last few decades due to climate change, especially off the eastern coast of the island. We investigated whether the kelp influences the settlement of lobster post-larvae to artificial collectors and how the presence of kelp affected the overnight predation on the early benthic phase (EBP). Settlement of lobster was tracked over 6 months using crevice collectors that had either natural or artificial giant kelp, Macrocystis pyrifera attached, or nothing attached (control). Collectors with natural kelp had higher catches than those with artificial kelp or controls (p = 0.003), which suggested enhanced settlement through chemical attraction. Additionally, we measured overnight predation of the EBP in barren and kelp habitats individually tethered to artificial shelters. The kelp habitat was dominated by brown macroalgal species of Ecklonia radiata, Phyllospora comosa, and M. pyrifera, while the barren was devoid of macroalgae. Survival of the EBP was higher (~40%) in the kelp habitat than in the barren habitat (~10%) due to differences in predation (p = 0.016). These results suggest that the kelp habitat improves the recruitment of J. edwardsii and that decline in this habitat may affect local lobster productivity along the east coast of Tasmania.