Substantial amounts of dead wood in the intertidal zone of mature mangrove forests are tunnelled by teredinid bivalves. When the tunnels are exposed, animals are able to use tunnels as refuges. In this study, the effect of teredinid tunnelling upon mangrove forest faunal diversity was investigated. Mangrove forests exposed to long emersion times had fewer teredinid tunnels in wood and wood not containing teredinid tunnels had very few species and abundance of animals. However, with a greater cross-sectional percentage surface area of teredinid tunnels, the numbers of species and abundance of animals was significantly higher. Temperatures within teredinid-attacked wood were significantly cooler compared with air temperatures, and animal abundance was greater in wood with cooler temperatures. Animals inside the tunnels within the wood may avoid desiccation by escaping the higher temperatures. Animals co-existing in teredinid tunnelled wood ranged from animals found in terrestrial ecosystems including centipedes, crickets and spiders, and animals found in subtidal marine ecosystems such as fish, octopods and polychaetes. There was also evidence of breeding within teredinid-attacked wood, as many juvenile individuals were found, and they may also benefit from the cooler wood temperatures. Teredinid tunnelled wood is a key low-tide refuge for cryptic animals, which would otherwise be exposed to fishes and birds, and higher external temperatures. This study provides evidence that teredinids are ecosystem engineers and also provides an example of a mechanism whereby mangrove forests support intertidal biodiversity and nurseries through the wood-boring activity of teredinids.