Reef-building corals are obligate, mutualistic symbioses of heterotrophic animals and phototrophic dinoflagellates (Symbiodinium spp.). Contrary to the earlier, widely accepted belief that corals harbour only one symbiont, we found that the ecologically dominant Caribbean corals Montastraea annularis and M. faveolata can act as hosts to dynamic, multi-species communities of Symbiodinium. Composition of these communities follows gradients of environmental irradiance, implying that physiological acclimatization is not the only mechanism by which corals cope with environmental heterogeneity. The importance of this diversity was underlined by analysis of a natural episode of coral bleaching. Patterns of bleaching could be explained by the preferential elimination of a symbiont associated with low irradiance from the brightest parts of its distribution. Comparative analyses of symbionts before and after bleaching from the same corals supported this interpretation, and suggested that some corals were protected from bleaching by hosting an additional symbiont that is more tolerant of high irradiance and temperature. This 'natural experiment' suggests that temporal and spatial variability can favour the coexistence of diverse symbionts within a host, despite the potential for destabilizing competition among them.