Seagrass habitats are susceptible to coastal, environmental impacts and serve as early indicators of system-wide degradation. SeagrassNet is a global seagrass monitoring network with 60 sites in 22 countries doing quarterly assessment of fixed transects for plant and environmental parameters (www.SeagrassNet.org). Two SeagrassNet sites were established in Sabah (Malaysia) in 2001in a national park, with one as a reference (pristine) site and one anticipating impacts from nearby waterfront development. Seagrass percent cover at both sites declined significantly between 2003 and 2005, and has remained low in areas of both low and high seagrass diversity (ranging from 1 to 5 species). The extent of species loss, reduction in percent cover, and decreased biomass in both the pristine site and the impact site is indicative of system-wide degradation. We discuss possible causes of the seagrass decline with respect to our simultaneously collected environmental data (i.e., light extinction, temperature, and sediment parameters) and identify a link to a recent change in land-use practices which resulted in extensive deforestation of the watershed proximal to the two Sabah SeagrassNet sites. Satellite imagery confirms the persistent sediment plume covering both SeagrassNet sites and the waters of the national park.