The Caribbean reef shark is found throughout tropical waters, particularly in the Caribbean Sea. This shark’s range includes Florida, Bermuda, the northern Gulf of Mexico, Yucatan, Cuba, Jamaica, Bahamas, Mexico, Puerto Rico, Colombia, Venezuela, and Brazil. It is one of the most abundant sharks around the Bahamas and the Antilles. Although Caribbean reef sharks are found near reefs in southern Florida, surveys using long-line gear off the east coast of Florida reveal that Caribbean reef sharks are extremely rare north of the Florida Keys.
Caribbean reef sharks are sometimes seen resting motionless on the sea floor or inside caves; it is the first active shark species in which such a behavior was reported. In 1975, Eugenie Clark investigated the famed "sleeping sharks" inside the caves at Isla Mujeres off the Yucatan Peninsula, and determined that the sharks were not actually asleep as their eyes would follow divers. Clark speculated that freshwater upwellings inside the caves might loosen parasites on the sharks and produce an enjoyable "narcotic" effect. If threatened, Caribbean reef sharks sometimes perform a threat display, in which they swim in a short, jerky fashion with frequent changes in direction and repeated, brief (1–1.2 second duration) drops of the pectoral fins. This display is less pronounced than the better-known display of the grey reef shark (C. amblyrhynchos).
Most observed displays by grey reef sharks have been in response to a diver (or submersible) approaching and following it from a few meters behind and above. They also perform the display towards moray eels, and in one instance towards a much larger great hammerhead (which subsequently withdrew). However, they have never been seen performing threat displays towards each other. This suggests the display is primarily a response to potential threats (i.e. predators) rather than competitors. As grey reef sharks are not territorial, they are speculated to be defending a critical volume of "personal space" around themselves. Compared to sharks from French Polynesia or Micronesia, grey reef sharks from the Indian Ocean and western Pacific are not as aggressive and less given to displaying.
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The Caribbean reef shark feeds on a wide variety of reef-dwelling bony fishes and cephalopods, as well as some elasmobranchs such as eagle rays (Aetobatus narinari) and yellow stingrays (Urobatis jamaicensis). It is attracted to low-frequency sounds, which are indicative of struggling fish. In one observation of a 2 m (6.6 ft) long male Caribbean reef shark hunting a yellowtail snapper (Lutjanus crysurus), the shark languidly circled and made several seemingly "half-hearted" turns towards its prey, before suddenly accelerating and swinging its head sideways to capture the snapper at the corner of its jaws. Young sharks feed on small fishes, shrimps, and crabs. Caribbean reef sharks are capable of everting their stomachs, which likely serves to cleanse indigestible particles, parasites, and mucus from the stomach lining.