The recruitment of Strangomera bentincki (common sardine) and Engraulis ringens (anchovy) and the relationships with oceanographic conditions in the upwelling ecosystem of central-south Chile were investigated from 1990 to 1998, with emphasis on the 1997–1998 El Niño. Time series of recruitment, biomass, local sea surface temperature, and a coastal upwelling index were used to explore relationships during the spawning (July–August) and pre-recruitment (August–December) periods. The 1997–1998 El Niño caused physical changes in the small pelagic fish habitat off central-south Chile. Anomalous sea surface temperatures (SST) and upwelling indexes began to be detected from May 1997 and persisted into 1998. Recruitment of common sardine showed significantly negative relationship with SST anomalies during the pre-recruitment period, as well as with the upwelling index during the peak of spawning. However, the recruitment of anchovy did not seem to be affected by the environmental changes observed in the 1990s. Instead, the recruitment rate of anchovy showed negative relationship with the recruitment rate of common sardine. We conclude that the conditions of the 1997–1998 El Niño off central-south Chile affected the survival of common sardine offspring, and that the recruitment success of anchovy could be determined by less-abundant cohorts of common sardine through a biological mechanism of interaction.