Mountaintop removal and valley fill (MTR/VF) coal mining has altered the landscape of the Central Appalachian region in the USA. Among the changes are large-scale topographic recontouring, burial of headwater streams, and degradation of downstream water quality. The goals of our study were to: 1) compare the structure and function of natural and constructed stream channels in forested and MTR/VF catchments across ephemeral, intermittent, and perennial flow regimes and 2) assess the relationship between leaf litter breakdown and structural measures, such as the habitat assessments currently used by regulatory agencies. Specific conductance of stream water was, on average, 36 to 57× higher at perennial reaches below valley fills than at perennial reaches in forested catchments, whereas pH was circumneutral in both catchment types. Channel habitat and invertebrate assemblages in litter bags differed between forested streams and constructed channels in VF catchments. Invertebrate density, diversity, and biomass were typically higher in litter bags from forested catchments than from VF catchments. No differences in fungal biomass, estimated as ergosterol concentration, were detected between litter bags from forested and VF catchments. Breakdown of oak (Quercus alba) leaves was slower at perennial and intermittent reaches in VF catchments than at perennial and intermittent reaches in forested catchments. However, breakdown rates did not differ between ephemeral reaches on VFs and in forested catchments. Breakdown rates of oak leaves were significantly correlated to conductivity at perennial and intermittent reaches and to shredder diversity across all reaches, but were not correlated with habitat assessment scores currently being used to determine compensatory mitigation. Landuse changes associated with MTR/VF have detrimental consequences to headwater stream function that are not adequately evaluated using the prevalent habitat assessment.