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During the last century, eutrophication significantly reduced the depth distribution and density of the habitat forming eelgrass meadows (Zostera marina) in Danish coastal waters. Despite large reductions in nutrient loadings and improved water quality, Danish eelgrass meadows are currently not as widely distributed as expected from improvements in water clarity alone. This point to the importance of other environmental conditions such as sediment quality, wave exposure, oxygen conditions and water temperature that may limit eelgrass growth and contribute to constraining current distributions. Recently, detailed local models have been set up to evaluate the importance of such regulating factors in selected Danish coastal areas, but nationwide maps of eelgrass distribution and large-scale evaluations of regulating factors are still lacking. To provide such nationwide information, we applied a spatial habitat GIS modeling approach, which combines information on six key eelgrass habitat requirements (light availability, water temperature, salinity, frequency of low oxygen concentration, wave exposure, and sediment type) for which we were able to obtain national coverage. The modeled potential current distribution area of Danish eelgrass meadows was 2204 km2 compared to historical estimates of around 7000 km2, indicating a great potential for further distribution. While validating the modeled eelgrass distribution area in three areas (83–111 km2) that hold large eelgrass meadows, we found an agreement of 67% with in situ monitoring data and 77% for eelgrass areas as identified from summer orthophotos. The GIS model predicted higher coverage especially in shallow waters and near the depth limits. Areas of disagreement between GIS-modeled and observed coverage generally exhibited higher exposure level, mean summer temperature and salinity compared to areas of agreement. A sensitivity analysis showed that the modeled area distribution of eelgrass was highly sensitive to light conditions, with 18–38% increase in coverage following an increase in light availability of 20%. Modeled coverage of eelgrass was also sensitive to wave exposure and temperature conditions while less sensitive to changes in oxygen and salinity conditions. Large regional differences in habitat conditions suggest spatial variation in the factors currently limiting the recovery of eelgrass and, hence, variations in actions required for sustainable management.