Colonial epifauna are vulnerable to the effects of bottom fishing, but impacts on the life histories of these non-target animals have not been examined extensively. Dredging potentially impairs sexual reproduction by invoking regeneration and induces clonality by severing colonies or through the abortion of damaged modules. This study investigated the potential for commercial-scale scallop dredging to alter sexual and asexual (′clonal′) reproduction in the hydroid Sertularia cupressina. In total, 1,071 colonies from 104 epizoic microhabitats (upper valves of live scallops relatively undisturbed by fishing) and 75 epilithic microhabitats (cobbles more severely disturbed by fishing) were collected from 53 to 94-m depths in the Bay of Fundy (Atlantic Canada). Colony abundance, injury frequency (proportion of colonies with sealed, snapped off stems), percentage of fertile colonies and sexual fecundity (number of gonophores and gonophore dimensions) were measured on all substrata. Ten randomly amplified polymorphic DNA (RAPD) primers were used to estimate clonal diversity. Field experiments found no significant effect of microhabitat differences between scallop and cobble substrata on fecundity and clonality in S. cupressina, while experimentally-induced injuries suppressed the percent of fertile colonies. On the fishing grounds, colonies on scallop valves were more abundant and sexually fertile than their counterparts on cobble, and all were sexually derived. In contrast, colonies on cobbles had a greater percentage of injury, were less fertile and were frequently clonally-derived. Impacts of fishing-related injuries on reproduction in colonial epifauna have been overlooked, yet the long-term consequences of such impacts could result in reduced adaptability, recruitment and recovery potential of these and dependent organisms.