Small herbivores are abundant on large marine macrophytes, but their impact on their hosts is poorly understood relative to large grazers such as urchins and fish. To limit the risks of predation, many marine mesograzers live within nests or burrows, potentially causing more damage to plants than predicted from consumption alone. To test whether the growth of large primary producers can be affected by modification of plant structures by small herbivores, we quantified the effect of the nest-building amphipod Pseudopleonexes lessoniae on blades of the giant kelp, Macrocystis pyrifera in New Zealand. Amphipods create their nests by rolling the blade margin in close proximity to the meristem. Blades with nests were 40% shorter than blades lacking nests and reduced in area by 55%. We examined the composition of amphipods inhabiting each nest to assess the temporal persistence of grazer aggregations. Nests were occupied by a single female or male–female pairs, and their newly hatched offspring. Analysis of offspring size distributions suggested that offspring dispersed from the maternal nest and did not remain to breed themselves. By concentrating physical damage and feeding on valuable tissues, these results indicate that even low numbers of small herbivores can cause localized impacts on the morphology and size of fast-growing algal blades. Predicting the consequences of this damage on larger scales will require understanding the spatial and temporal distribution of amphipod nests on giant kelp.