Coral reefs in the South China Sea are threatened by environmental changes and anthropogenic disruptions. Foraminifera, a group of unicellular shelled protists, has been considered a reliable indicator of water quality and reef health. However, this indicator has not yet been used to study coral reefs in the South China Sea. In this study of foraminifera in the lagoon of Dongsha Atoll, both the assemblage diversity and the functional group composition were investigated. The FORAM index (FI), a numerical indicator based on functional group composition, was used to evaluate the condition of the coral reef of the Atoll lagoon. A typical assumption is that FI = 4 is the minimum index value corresponding to a suitable environment for the growth of calcifying organisms. Environments with FI values between 2 and 4 are unsuitable to marginal for recovery of coral communities after a mortality event. Data were recorded regarding a total of 287 foraminiferal species. Approximately 68% of the tests belonged to the porcelaneous taxa; the , , and species were well represented. Hyaline foraminifera were less abundant than porcelaneous foraminifera; the agglutinated foraminifera were the least abundant. Multivariate analyses revealed four clustering groups. The functional groups were classified according to FI's definition; the heterotrophic group was the most abundant, accounting for 82% of foraminiferal abundance. The symbiont-bearing group was the second most abundant, with a relative abundance of 12%; and the stress-tolerant group was the least abundant. Two samples had FI values slightly higher than 4; and were dominant, but the other symbiont-bearing foraminifera had lower values. These high FI values can be associated with seagrass meadows or relict shells in an altered environment. Eighty percent of the sediment samples had FI values lower than 4, indicating that most of the benthic habitats in the Dongsha lagoon are not suitable for coral growth and reef recovery. The present findings provide an alternative evaluation method based on foraminiferal assemblages for future studies on the environmental changes of coral reefs.