The density of dinoflagellate microalgae in the tissue of symbiotic corals is an important determinant for health and productivity of the coral animal. Yet, the specific mechanism for their regulation and the consequence for coral nutrition are insufficiently understood due to past methodological limitations to resolve the fine-scale metabolic consequences of fluctuating densities. Here, we characterized the physiological and nutritional consequences of symbiont density variations on the colony and tissue level in Stylophora pistillata from the Red Sea. Alterations in symbiont photophysiology maintained coral productivity and host nutrition across a broad range of symbiont densities. However, we demonstrate that density-dependent nutrient competition between individual symbiont cells, manifested as reduced nitrogen assimilation and cell biomass, probably creates the negative feedback mechanism for symbiont population growth that ultimately defines the steady-state density. Despite fundamental changes in symbiont nitrogen assimilation, we found no density-related metabolic optimum beyond which host nutrient assimilation or tissue biomass declined, indicating that host nutrient demand is sufficiently met across the typically observed range of symbiont densities under ambient conditions.