Structured habitats such as seagrasses provide juvenile fishes with refuge from predation and support high densities of their prey. Studies of juvenile fishes in seagrass have primarily focused on canopy-dwelling species, whereas few studies have considered nursery requirements for commercially important benthic flatfishes such as halibut that may have alternate predator avoidance and foraging strategies. We conducted field experiments to determine (i) whether juvenile California halibut (Paralichthys californicus) prefer eelgrass (Zostera marina) to unvegetated sediment in enclosures spanning a habitat interface, (ii) the influence of habitat on relative survival of tethered, and (iii) how prey intake varies between halibut restricted to eelgrass or to unvegetated sediment in enclosures and compares to prey community composition between habitats. Juvenile halibut displayed a strong preference for eelgrass in cages spanning an eelgrass-unvegetated sediment interface. Halibut survival was highest in unvegetated sediment and lowest at the eelgrass patch edge and interior. There was no difference in gut fullness or in biomass or composition of prey in gut contents of halibut restricted to unvegetated sediment or eelgrass, though prey assemblages were different between habitats and biomass of common halibut prey was higher in eelgrass than in unvegetated sediment. Our research demonstrates that eelgrass habitat my provide important services for commercially important California halibut, and further research is warranted and may contribute to our understanding of the interactions between juvenile California habitat and coastal nursery habitats.