Habitat-modifiers can facilitate associated organisms by providing a refuge from predation and/or physical stress, thus acting as a foundation species. Chemical deterrence to predation is abundant in nature and can account for the persistence of numerous foundation species across many environments. The phoronid, Phoronopsis viridis, is a chemically noxious marine worm that builds solid tubes, occurs at high densities (~26,000 m^-2), and stabilizes the substrate in tidal flats. Our survey showed higher infaunal abundance and richness in sites with high densities of phoronids compared to low phoronid density areas. Experiments were carried out using transplants of phoronids and structural mimics lacking defensive chemicals to disentangle the effects of physical structure and chemically mediated refuge from predation on the distribution of infauna. Our field manipulation did not reflect the increase in infaunal abundance and richness in phoronid or phoronid mimic treatments evident from our survey, however there was an increase in evenness, and showed that a few, otherwise rare species (notably another habitat-modifier, the spionid polychaete Boccarida proboscidia) respond positively to the presence of the phoronid and phoronid structure, compared to unmanipulated and bare sediments. Laboratory experiments indicate that phoronids are providing a structural refuge from predators, as predation on clams by crabs was reduced by the presence of phoronids and phoronid mimics. Our study suggests that the chemical deterrent to predation produced by P. viridis may be allowing them to persist and attain high densities thereby providing the physical structure that can directly alter the distribution of some associated taxa.