Marine heatwaves (MHWs) in the tropical Indian Ocean (TIO) have intensified in duration and frequency during the satellite observing era, causing severe ecological disruptions. However, the vertical structure of MHWs and their effects on phytoplankton across the entire euphotic zone (0-200 m) remain unclear. Here, using BGC-Argo, satellite, and reanalysis data, we analyze a prolonged MHW event (443 days, 2019–2020) in the southern TIO upwelling region, driven by persistent downwelling oceanic planetary waves. Our results show that during austral summer-fall 2019/2020, subsurface-intensified MHWs reduced phytoplankton chlorophyll a concentration (Chla, -20%) and particulate organic carbon (POC, -10%) in the upper mixed layer (0–80 m) via combined thermal stress and nutrient limitation. Below mixed layer (80–150 m), photoacclimation decoupled Chla from biomass, yielding a 30% Chla increase despite of stable POC levels. In austral winter-spring 2019/2020, surface-intensified MHWs suppressed mixed-layer Chla (−40%) more severely than POC (−10%), indicating photoacclimation-mediated carbon retention. This study establishes that subsurface MHWs degrade the deep chlorophyll maximum (DCM) and carbon export, whereas surface-intensified MHWs dominate mixed-layer productivity declines. Moreover, subsurface phytoplankton biomass responses to MHWs may be overlooked by satellites, posing significant threats to mesopelagic biodiversity hotspots.