We examined the effects of beaver impoundments on the benthic macroinvertebrate assemblages of two small Appalachian streams, Mountain Run (Somerset County, Pennsylvania) and a tributary to Herrington Creek (Garrett County, Maryland). Benthic macroinvertebrate assemblages above the impoundments were compared with assemblages within the impoundments and 1 m, 10 m, and 100 m below the impoundments. The results of our study indicate that beaver affect both within-impoundment and downstream benthic macroinvertebrate assemblages. Taxonomic and functional changes in benthic macroinvertebrate assemblages of the beaver-altered streams were a result of direct (impoundment) and indirect (changes in temperature, water chemistry, plant growth) alterations of the stream environment.