The Kilo Nalu Observatory is located on the foreslope of a fringing reef on the south shore of Oahu, Hawaii. A cabled node at 12-m depth has enabled continuous real-time temperature observations from a thermistor chain extending from 1 to 7 m above bottom. Data from a 27-month deployment in 2007–2009 reveal repeated instances of subsurface temperature inversions. The usual diurnal pattern shows increases in temperature throughout the water column after sunrise, peaking in the early afternoon. Bottom waters typically warm faster than those at mid-depth, driving an inversion in the thermal profile. The onset and evolution of the inversions are consistent with an analytical model of radiation absorption and the contribution to bottom temperature from solar warming of the seafloor. The maximum size, duration and seasonal distribution of the inversions indicate that salinity compensation is a major limiting factor. In the absence of salinity compensation, the implication is that bottom heating destabilizes the water column and convective transport results. In addition, recurring afternoon onshore bottom currents contribute to the termination of inversions. Although radiative heating may exacerbate coral heat stress, radiation-driven thermal convection and exposure to the open ocean modulate temperatures over the reef.