Habitat-modifying invasive species can influence rates of predation on native prey either directly by providing protective structure or indirectly by modifying traits of prey species responding to the habitat. The alga Caulerpa taxifolia is one of the most successful invasive species of shallow-water marine systems globally, often provisioning habitat in areas previously lacking in vegetated structure. We experimentally evaluated the direct effect of Caulerpa to provide refuge for the native clam Anadara trapezia and how this balances with its influence on two trait-mediated indirect interactions that may increase Anadara's susceptibility to predators. Specifically, Caulerpa's alteration of physical and chemical properties of the surrounding water and sediment deteriorate Anadara's condition and predator resistance properties and also cause Anadara, though normally buried, to project from beneath the sediment, exposing it to predators. Our results show that Anadara are somewhat (but not consistently) protected from predators by living among Caulerpa. Shallow burial depth did not counteract this protective effect. However at times of year when predator activity diminishes and conducive environmental conditions develop, negative effects of Caulerpa habitat such as hypoxia and lowered flow may dominate. Under such situations, poor clam condition accentuates Anadara's susceptibility to mortality. Ultimately, a slight and inconsistent positive effect of Caulerpa to protect Anadara from predators is exceeded by the strong negative effect of Caulerpa on clam mortality, which is heightened by clams' weakened condition produced by chronic exposure to Caulerpa. Our results show that invasive habitat-modifying species can affect mortality of native species not simply through obvious positive direct effects of their protective structure, but indirectly through contrasting negative modification of the traits of prey species responding to the habitat.