Reef-building corals in the genus Porites are one of the most important constituents of Indo-Pacific reefs. Many species within this genus tolerate abnormally warm water and exhibit high specificity for particular kinds of endosymbiotic dinoflagellates that cope with thermal stress better than those living in other corals. Still, during extreme ocean heating, some Porites exhibit differences in their stress tolerance. While corals have different physiological qualities, it remains unknown whether the stability and performance of these mutualisms is influenced by the physiology and genetic relatedness of their symbionts. We investigated two ubiquitous Pacific reef corals, Porites rus and Porites cylindrica, from warmer inshore and cooler offshore reef systems in Palau. While these corals harbored a similar kind of symbiont in the genus Cladocopium (within the ITS2 C15 subclade), rapidly evolving genetic markers revealed evolutionarily diverged lineages corresponding to each Porites species living in each reef habitat. Furthermore, these closely related Cladocopium lineages were differentiated by their densities in host tissues, cell volume, chlorophyll concentration, gross photosynthesis, and photoprotective pathways. When assessed using several physiological proxies, these previously undifferentiated symbionts contrasted in their tolerance to thermal stress. Symbionts within P. cylindrica were relatively unaffected by exposure to 32°C for 14 days, whereas P. rus colonies lost substantial numbers of photochemically compromised symbionts. Heating reduced the ability of the offshore symbiont associated with P. rus to translocate carbon to the coral. By contrast, high temperatures enhanced symbiont carbon assimilation and delivery to the coral skeleton of inshore P. cylindrica. This study indicates that large physiological differences exist even among closely related symbionts, with significant implications for thermal susceptibility among reef-building Porites.