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Determining the life-history consequences for fishes living in extreme and variable environments will be vital in predicting the likely impacts of ongoing climate change on reef fish demography. Here, we compare size-at-age and maximum body size of two common reef fish species (Lutjanus ehrenbergii and Pomacanthus maculosus) between the environmentally extreme Arabian/Persian Gulf (‘Arabian Gulf’) and adjacent comparably benign Oman Sea. Additionally, we use otolith increment width profiles to investigate the influence of temperature, salinity and productivity on the individual growth rates. Individuals of both species showed smaller size-at-age and lower maximum size in the Arabian Gulf compared to conspecifics in the less extreme and less variable environment of the Oman Sea, suggesting a life-history trade-off between size and metabolic demands. Salinity was the best environmental predictor of interannual growth across species and regions, with low growth corresponding to more saline conditions. However, salinity had a weaker negative effect on interannual growth of fishes in the Arabian Gulf than in the Oman Sea, indicating Arabian Gulf populations may be better able to acclimate to changing environmental conditions. Temperature had a weak positive effect on the interannual growth of fishes in the Arabian Gulf, suggesting that these populations may still be living within their thermal windows. Our results highlight the potential importance of osmoregulatory cost in impacting growth, and the need to consider the effect of multiple stressors when investigating the consequences of future climate change on fish demography.