Diurnal fluctuations in seawater temperature are ubiquitous on tropical reef flats. However, effects of such dynamic temperature variations on the early stages of corals are poorly understood. Here, we investigated the responses of larvae and new spats of Pocillopora damicornis to two constant temperature treatments (29 and 31 °C), and two diurnally fluctuating treatments (28–31 and 30–33 °C with daily means of 29 and 31 °C, respectively) simulating the 3 °C diel oscillations at 3 m depth on Luhuitou fringing reef (Sanya, China). Results showed that the thermal stress on settlement at 31 °C was almost negated by the fluctuating treatment. Further, temperature fluctuations did not exacerbate bleaching responses but alleviated the maximum excitation pressure over photosystem Ⅱ (PSⅡ). Although early growth and development were highly stimulated at 31 °C, oscillations of 3 °C had little effects on budding and lateral growth. Nevertheless, daytime encounters with the maximum temperature of 33 °C elicited a notable reduction in calcification. These results underscore the complexity in the effects caused by diel temperature fluctuations on early stages of corals, and suggest that the ecologically relevant temperature variability could buffer the warming stress on larval settlement and dampen the positive effects of increased temperatures on coral growth.