Microsize intermittently open and closed coastal lagoons are a common feature of the coast of southern New South Wales, in southeast Australia. Many of these lagoons are undergoing development and urbanisation of their catchments, leading to concern about their ecological health. Consequently, it was hypothesised that lagoons with urbanised catchments should hav e finer, more contaminated sediments and fewer macrofaunal taxa (represented by opportunistic taxa) than lagoons that have undeveloped, forested catchments. To test these hypotheses, five lagoons with catchments dominated by either native forest or urban development were compared with respect to their sediment composition (i.e. sediment grain size, trace metal concentrations, organic carbon and nutrients) and soft sediment macrofaunal assemblages in the Batemans Bay region of southeast Australia. Using a nested design without temporal replication, replicate core samples were taken from sampling stations nested within lagoons that were nested within catchment type. Univariate and multivariate statistical analyses were used to test for significant differences and dissimilarities between catchment types and among lagoons. Of all the abiotic and biotic variables measured, only total nitrogen showed a difference between the two catchment types. Thus providing support to refute the explanatory model that urbanisation had negatively affected the sedimentary environment and macrofaunal composition of these microsize coastal lagoons. In contrast, differences among lagoons were usually significant with differences between the two forested lagoons, North Head and Acheron lagoon, being particularly large for assemblage composition and the abundance of some taxa; this variation may, potentially, obscure any effects of urbanisation. In addition, the information collected in this study provides a basic understanding of the physicochemical and biological aspects of microsize coastal lagoons in southeast Australia. Such information is currently lacking in these unique estuarine ecosystems but is critical for their effective management, particularly as the urbanisation of their catchments is increasing. Issues arising from design limitations are also briefly discussed.