Many small marine herbivores utilize specific algal hosts, but the ultimate factors that shape host selection are not well understood. For example, the use of particular microhabitats within algal hosts and the functional role of these microhabitats have received little attention, especially in large algae such as kelps. We studied microhabitat use of the herbivorous amphipod Peramphithoe femorata that inhabits nest-like domiciles on the blades of giant kelp Macrocystis pyrifera. The vertical position of nest-bearing blades along the stipe of the algal thallus and the position of the nests within the lateral blades of M. pyrifera were surveyed in two kelp forests in northern-central Chile. Additionally, we conducted laboratory and field experiments to unravel the mechanisms driving the observed distributions. Peramphithoe femorata nests were predominantly built on the distal blade tips in apical sections of the stipes. Within-blade and within-stipe feeding preferences of P. femorata did not explain the amphipod distribution. Amphipods did not consistently select distal over proximal blade sections in habitat choice experiments. Mortality of tethered amphipods without nests was higher at the seafloor than at the sea surface in the field. Nests mitigated mortality of tethered amphipods, especially at the seafloor. Thus, protective microhabitats within thalli of large kelp species can substantially enhance survival of small marine herbivores. Our results suggest that differential survival from predation might be more important than food preferences in determining the microhabitat distribution of these herbivores.