Larval dispersal phases are a key determinant of population dynamics in recruitment-limited, coastal upwelling regions. Larvae were long considered to be highly susceptible to offshore transport, except in the lee of headlands where eddies form during upwelling conditions. We examined the spatial variation of benthic invertebrate larval assemblages in relation to the retentive upwelling shadow in northern Monterey Bay (California, USA) during strong upwelling (August 2013) and weak upwelling (October 2013). We characterized the spatial variation in physical characteristics of the water column, determined the cross-shore and depth distributions of invertebrate larvae in relation to the upwelling shadow, and examined how these physical and biological patterns change with upwelling strength. Larval abundances and environmental data (water temperature, salinity, chlorophyll a concentration) were collected simultaneously using a plankton pump and profiling CTD at 3 depths: above, within, and below the chlorophyll a maximum layer. Larvae were primarily detected near the bottom. Larvae of most taxa were positively associated with a subsurface chlorophyll a maximum layer in August, but not in October when this layer was near the surface. Adult habitat distribution was related to the spatial distribution of larvae. Larvae of nearshore taxa occurred in the inner bay, while larvae of predominately offshore taxa occurred in the outer bay. Taxa with similar adult habitat (nearshore versus offshore) co-occurred in water samples. In addition, larvae of offshore taxa were commonly associated with offshore water types. Thus, the distribution of larvae within northern Monterey Bay appears to be strongly influenced by adult habitat distribution, vertical positioning of larvae in the water column, and upwelling strength.