In 2013, a category 5 five very severe cyclonic storm (VSCS) ‘Phailin’ hit part of the East coast of India including Chilika, the largest coastal lagoon of Asia facing the northwest coastal Bay of Bengal of the Northen Indian Ocean. A study was undertaken in Chilika lagoon to test the hypothesis if benthic faunal communities respond and recover from the impacts of a major cyclonic storm 'Phailin' and implications for critical ecosystem processes such as lagoonal carbon cycling. In situ environmental parameters namely salinity, surface water temperature, transparency, dissolved oxygen were measured from surface water and sediment water interface bottom water overlaying the sediment representing 14 stations of Chilika lagoon before cyclone, immediately after cyclone and recovery period. Besides, dissolved nutrients (nitrate, ammonia, o-phosphate and silicate) concentrations were measured for surface water and sediment-water interface. Benthic macrofaunal and meiofaunal community structures were deduced from collected sediments representing the study period from all the stations. Additionally, sediment grain size and total organic carbon (TOC) content of sediment representing the above stations were analyzed. Measured environmental variables such as salinity, water transparency, dissolved nitrate and dissolved o-phosphate values dramatically decreased immediately after the cyclone compared to before cyclone months and subsequently during recovery period the values reached to before cyclone months. On the other hand, TOC concentrations of sediment compared to before cyclone and subsequently reached value found before the cyclone whereas TOC concentrations of sediment steadily increased throughout study period. The abundance of benthic fauna (macro and meiofauna) showed significant decrease but there was only minor changes observed at the species level immediately after the cyclone but eventually there was improvement in terms of an increase in abundance and diversity during recovery period. The observed high TOC could have implications in terms of persistent of sedimentary hypoxia, consequences on ecological processes such as benthic-pelagic coupling and resulting impacts on fisheries as well as coastal blue economy within the region and beyond.