Tropical fish tanks in restaurants, hospitals and homes evoke feelings of tranquility and beauty. They even lower stress levels prior to medical procedures and encourage Alzheimer's patients to eat sufficiently. But what's good for humans may be bad for the sea.

Most tropical fish sold in pet stores come from reefs in Indonesia and the Philippines, where fishermen stun the colorful dwellers with squirts of sodium cyanide. The potent nerve toxin causes the fish to float up out of the reefs so they can be easily scooped up, but it can also injure or kill them as well as trigger coral bleaching.

"What I find ironic is that people love the ocean. They want to keep a slice of it in their living room. But they're killing the coral reefs," says Søren Hansen a co-founder of Sea and Reef Aquaculture, LLC, in Franklin, Me., one of only a handful of tropical fish farmers in the U.S.

Why not breed the saltwater fish on farms everywhere? Most fish in freshwater tanks—which are much more common, less expensive and easier to maintain—are indeed farm-raised. But breeding saltwater fish in an industrial aquaculture facility requires re-creating the coral reef ecosystem, a technology that is just moving out of its infancy.

Improvement is urgently needed. Tropical fish sales are estimated at $200 million to $300 million a year worldwide. The U.S. imports about 11 million of the fish annually, out of 20 million sold globally. Estimates suggest that 70 to 90 percent of captured fish die before they ever reach a tank, and more perish within their first six months in captivity. "It's an overlooked industry," says Frank Baensch, a tropical fish farmer in Honolulu, adding that "If I wanted to, I could bring in species on the Red List [of endangered species] and nobody would know."

The demand for tropical fish soared in 2004, when Finding Nemo—an animated movie about father and son clown fish, Marlin and Nemo—prompted a buying frenzy. "Every kid wanted a Nemo and Dory [a regal tang that also stars in the movie] in their fish tank," recalls Andrew Rhyne, a marine biologist at Roger Williams University in Bristol, R.I.. No one thought to measure the change in the number of wild-caught fish, Rhyne says. But clown fish sales at the world's largest fish hatchery—Ocean, Reefs & Aquariums in Fort Pierce, Fla.—jumped 40 percent.

Retailers are preparing for another sales spike this fall, when Finding Nemo 3-D will be released.

Luckily, clown fish are among the few tropical fish that breed in captivity. Like most demersal fish—those that spawn on hard surfaces—parents stick around to care for their young. Demersal larvae also emerge as fully formed miniature fish, making them relatively self-sufficient. Hobbyists have been breeding clown fish by trial and error for decades. These days, Hansen says, clown fish account for about 80 percent of all tropical fish sales.

Yet almost all of the other 1,500 or more species of tropical fish sold in stores are caught live in the ocean. That is because farmers have had much more limited success in breeding pelagic fish, which account for 90 percent of all tropical species. Pelagic fish spawn and then abandon their young. Larvae lack mouths, eyes and guts and are so fragile that colliding with an air bubble could kill them.

A key challenge has been figuring out what to feed young saltwater fish. Unlike freshwater tank fish, which readily devour processed flake food, tropical fish prefer to eat their meal while it is still flapping. Luckily, breeders found that many demersal fish eat freshwater rotifers—microscopic animals that clone themselves every 24 hours and require little space. The demersal fish fare even better when the rotifers are soaked in nutrient-rich fats and proteins found in the sea.

That research has led to the successful raising of clown fish on farms. Intriguingly, the fish are also being selectively bred. At his farm in Maine, Hansen shows off his morphs, which include chocolate-brown Maine mocha Nemos, snow-white blizzard Nemos and mind-bending Picasso Nemos. Designer Nemos look cool and retail strong, Hansen says, with hobbyists paying hundreds of dollars for the newest hybrid iteration.

The tools developed to breed the clown fish have recently been successfully applied to several dozen demersal species. But breeders are not anywhere close to domesticating pelagic fish. Because pelagic fish larvae are so tiny, they can only ingest food smaller than 80 microns. (A micron is one millionth of a meter, or about 40 millionths of an inch.) Identifying and cultivating these microscopic food sources has proved difficult.

Several years ago, Baensch bred the pelagic pygmy angelfish by feeding the larvae with copepod nauplii—copepods in their earliest life stage. Besides being extremely small, copepod nauplii are packed with digestive enzymes, an essential ingredient for the gutless larvae.

Baensch initially fed the larvae wild-caught copepod nauplii from the Pacific Ocean. He now cultures the nauplii for the larvae's earliest days, but then switches to wild copepods. Copepods are a challenge, however, because unlike rotifers, they avoid crowded conditions and need time to reproduce sexually. The nauplii also outgrow pelagic larvae within a few hours.

To scale up production of pelagic larvae, farmers must learn how to breed food for them on a large scale. They are making some headway. A team in Italy shrank the copepod's space requirements by raising nauplii in a large tank and then concentrating them in seawater. Hansen, meanwhile, is tinkering with novel nutrition options. In unpublished work, he has cultured a species of zooplankton and successfully reared angel fish larvae on it for 15 days, the duration of his first experiment.

Hansen and others hope that identifying and rearing food for pelagic tropical fish will finally allow farmers to replace the wild-caught fish sold to retailers with species raised in captivity. That change would protect reefs from further cyanide poisoning. "Aquaculture, the way I see it, is the future," says Gayatri Lilley, founder of the Indonesian Nature Foundation, a group dedicated to developing sustainable fisheries in Indonesia. "But [currently] the biology of these reef fish remains too complicated to culture all aquarium species."

Aquaculture is therefore only a partial solution. Lilley dedicates her time to training fishermen to use underwater nets instead of the cyanide method. But the fishermen need to know that buyers will pay a higher price for fish caught using sustainable practices.

Better monitoring of the industry is also sorely needed, such as a labeling system for all fish entering the market that would indicate how they were caught or whether they were farm raised. Right now, says Rhyne and his colleague Michael Tlusty, most tropical fish entering the market simply get coded as "marine tropical fish." That, Tlusty says, "would be like bringing in salmon, pollock and tuna and calling them all seafood."

Perseverance will be key to expanding tropical fish aquaculture. Baensch recalls an experiment in which he started with 100 trigger fish, only to have their numbers dwindle to 12 overnight. "Everything was fine," he says, "until the fish started killing each other." Trigger fish, it turns out, grow up to be highly aggressive adults. But work in clown fish suggests that innate tendencies can be bred out during the domestication process—which can also lead to better pets. Back at his farm, Hansen shows me a tank filled with hundreds of clown fish. They would never school like this in the ocean, he says, adding: "Wild-caught fish come in skittish. They won't eat. They hide in a corner. My fish are used to the captive environment. They'll eat anything you throw at them. They're bulletproof."