Oyster reefs have the potential as eco-engineers to improve coastal protection. A field experiment was undertaken to assess the benefit of oyster breakwater reefs to mitigate shoreline erosion in a monsoon-dominated subtropical system. Three breakwater reefs with recruited oysters were deployed on an eroding intertidal mudflat at Kutubdia Island, the southeast Bangladesh coast. Data were collected on wave dissipation by the reef structures, changes in shoreline profile, erosion-accretion patterns, and lateral saltmarsh movement and related growth. This was done over four seasons, including the rainy monsoon period. The observed wave heights in the study area ranged 0.1–0.5 m. The reefs were able to dissipate wave energy and act as breakwaters for tidal water levels between 0.5–1.0 m. Waves were totally blocked by the vertical relief of the reefs at water levels <0.5 m. On the lee side of the reefs, there was accretion of 29 cm clayey sediments with erosion reduction of 54% as compared to control sites. The changes caused by the deployed reefs also facilitated seaward expansion of the salt marsh. This study showed that breakwater oyster reefs can reduce erosion, trap suspended sediment, and support seaward saltmarsh expansion demonstrating the potential as a nature-based solution for protecting the subtropical coastlines.