Among sessile marine invertebrates, the dispersion patterns of settling larvae are likely to strongly affect the nature and strength of subsequent intraspecific interactions. We use a recently developed graphical analysis technique to examine in situ spacing among settled larvae of the colonial ascidian Clavelina moluccensis. Larvae were mapped at settlement each day for 1 month at the time of their release from adults. Experimental plots measuring 90 x 90 mm were located on naturally occurring bare patches of wood on pier pilings which were extensively encrusted with sponges and ascidians. An inclusive one-tailed nearest-neighbour analysis applied at the time of the maximum number of individuals per plot revealed consistent fine- scale regular spacing between settled larvae. Furthermore, a two-tailed goodness-of-fit analysis indicated two modes of spacing: one at about 4.5 mm and the other at around 9 mm. No contact between larvae was observed at settlement and the spatial regularity is interpreted as a response of settling larvae to water-borne cues released from settled individuals. The two modes of spacing indicate the possibility of kin recognition as has been demonstrated for bryozoans. Water-borne cues may also limit local population density, as those plots with a high density of settlers showed a much greater decrease in settlement rate over time than low-density plots. Our findings are consistent with the hypothesis that intraspecific competitive interactions shape the patterns of dispersion of these invertebrates on hard substrata in the field.