Approximately 7.3 hectares of wetlands, composed of six separate cells, were created to mitigate the loss of a 6-hectare, beaver-influenced, wetland-stream complex destroyed by the construction of a multi-purpose impoundment in the Cedar Run watershed in Fauquier County, Virginia, USA. The mitigation action physically replaced the lost wetlands and was judged successful in meeting planned objectives and regulatory requirements (which did not include standards for biota). A pre-project fish survey conducted in 1974 in the wetland-stream complex and three nearby streams provided a baseline condition from which to assess project impacts on fish, as determined from yearly surveys in the cells and the stream reach immediately upstream. In addition, fish communities were sampled at 157 stream locations within the northern Virginia Piedmont from 1997 to 1999 to establish a regional Index of Biotic Integrity (IBI) based on fish assemblages. A modification of that IBI was developed to assess the effectiveness of the mitigation based on 22 stream segments that were heavily influenced by beaver. Pre- and post-project conditions were assessed by gauging them against the wetland-stream complexes using this IBI. The IBI score for the mitigation area dropped from the pre-project 34 to 18 the first year after construction and ranged from 18 to 28 over the ten-year post-project monitoring period. A reduction in the number of native species was observed, and there was a dramatic shift in composition and relative abundance within key species groups. In general, the mitigation benefited species favoring lentic environments over those preferring lotic environments and had negative effects on trophic and habitat specialists and less tolerant species. Scores for the mitigation cells were lower than scores for the original wetlands for the following IBI metrics: number of darter species, number of minnow species, percent of the assemblage comprised of the single most dominant species, percent of tolerant individuals, percent of benthic invertivores, and percent of specialist carnivores minus tolerants. Upstream reach IBI scores also diminished over the same 10-year period, although more gradually. The IBI showed that, despite meeting all regulatory requirements, the mitigation failed to replace the original fish community in the wetland-stream complex and adversely impacted additional stream habitat. Using tools such as an IBI to monitor biological condition can help planners effectively mitigate unavoidable project impacts and avoid the unintended loss of important natural resources caused by compensatory mitigation actions.