Recent growth in the popularity of recreational scuba diving has generated concerns about resulting impacts to coral reefs, particularly in locations such as the Republic of Palau, a world-renowned dive destination with rapidly increasing numbers of visitors. Divers were observed in-water at three of the most visited dive sites in the Rock Islands—Southern Lagoon Area: German Channel, Ngerchong, and Big Drop-off. Dive guides were interviewed about diver impacts at German Channel and Ngerchong. Divers' contact rates with hard coral ranged from 0.87 ± 0.27 to 2.98 ± 0.59 contacts diver^-1 10 min^-1 (mean ± SEM). Three instances of obvious physical damage were observed. Holding and fin contacts were the most common potentially damaging behaviors of divers, particularly those with cameras or gloves. Guides identified natural impacts (63% of respondents) and divers (34% of respondents) as the primary causes of damage to coral. Proactive management is essential to mitigate any negative impacts of recreational diving on coral reefs and to ensure resilience against other increasing threats. Long-term monitoring of dive sites, controls on the use of gloves and underwater photography, and training of guides are suggested to minimize damage caused by divers to coral reefs in Palau and elsewhere.