Structural degradation of mangroves through the partial removal of trees is globally pervasive and likely to affect ecological functioning, including habitat provisioning for biodiversity. Biodiversity responses will depend on the severity of degradation, yet few studies contrast and quantify several degradation states. Addressing this knowledge gap, we sampled faunal diversity across a range of mangrove forests in southern Kenya. Canopy cover was the strongest predictor of faunal responses among forest structural variables. Faunal abundance, species richness and biodiversity all decreased with reduction in canopy cover, while taxonomic and functional composition changed. The trophic diversity of crabs peaked at intermediate canopy cover, with degraded habitats having more generalist species and fewer specialists. Functional redundancy was unaffected by canopy thinning. The decline in functional diversity and richness of brachyuran crabs with canopy cover implies resource-use efficiency weakens with increased degradation. Our results are indicative of significant alterations to forest functioning with degradation, as epibenthic faunal are important regulators of mangrove ecosystem processes, including nutrient cycling and carbon.