Seagrass meadows capture and store large amounts of carbon in the sediment beneath, thereby serving as efficient sinks of atmospheric CO₂. Carbon sequestration levels may however differ greatly among meadows depending on, among other factors, the plant community composition. Tropical seagrass meadows are often intermixed with macroalgae, many of which are calcareous, which may compete with seagrass for nutrients, light, and space. While the photosynthetic CO₂ uptake by both seagrasses and calcareous algae may increase the overall calcification in the system (by increasing the calcium carbonate saturation state, Ω), the calcification process of calcareous algae may lead to a release of CO₂, thereby affecting both productivity and calcification, and eventually also the meadows' carbon storage. This study estimated how plant productivity, CaCO₃ production, and sediment carbon levels were affected by plant community composition (seagrass and calcareous algae) in a tropical seagrass-dominated embayment (Zanzibar, Tanzania). Overall, the patterns of variability in productivity differed between the plant types, with net areal biomass productivity being highest in meadows containing both seagrass and calcareous algae. Low and moderate densities of calcareous algae enhanced seagrass biomass growth, while the presence of seagrass reduced the productivity of calcareous algae but increased their CaCO₃ content. Sedimentary carbon levels were highest when seagrasses were mixed with low or moderate cover of calcareous algae. The findings show that plant community composition can be an important driver for ecosystem productivity and blue carbon sequestration.