Coral cover has declined rapidly on Caribbean reefs since the early 1980s, reducing carbonate production and reef growth. Using a cross-regional dataset, we show that widespread reductions in bioerosion rates—a key carbonate cycling process—have accompanied carbonate production declines. Bioerosion by parrotfish, urchins, endolithic sponges and microendoliths collectively averages 2 G (where G = kg CaCO ₃ m ⁻² yr ⁻¹ ) (range 0.96–3.67 G). This rate is at least 75% lower than that reported from Caribbean reefs prior to their shift towards their present degraded state. Despite chronic overfishing, parrotfish are the dominant bioeroders, but erosion rates are reduced from averages of approximately 4 to 1.6 G. Urchin erosion rates have declined further and are functionally irrelevant to bioerosion on most reefs. These changes demonstrate a fundamental shift in Caribbean reef carbonate budget dynamics. To-date, reduced bioerosion rates have partially offset carbonate production declines, limiting the extent to which more widespread transitions to negative budget states have occurred. However, given the poor prognosis for coral recovery in the Caribbean and reported shifts to coral community states dominated by slower calcifying taxa, a continued transition from production to bioerosion-controlled budget states, which will increasingly threaten reef growth, is predicted.