Internationally, waterways within urban areas are subject to broad-scale environmental impairment from urban land uses. In this study, we used in-stream macroinvertebrates as surrogates to measure the aquatic health of urban streams in the established suburbs of northern Sydney, in temperate south eastern Australia. We compared these with samples collected from streams flowing in adjacent naturally vegetated catchments. Macroinvertebrates were collected over a 30-month period from riffle, edge and pool rock habitats and were identified to the family level. Macroinvertebrate assemblages were assessed against the influence of imperviousness and other catchment and water quality variables. The study revealed that urban streams were significantly impaired compared with those that flowed through naturally vegetated non-urban catchments. Urban streams had consistently lower family richness, and sensitive guilds were rare or missing. We found that variation in community assemblages among the in-stream habitats (pool edges, riffles and pool rocks) were more pronounced within streams in naturally vegetated catchments than in urban waterways.