Physical habitats of rivers are important factor to maintain fluvial ecosystem biodiversity and ecological functions. Habitats quality can reflect the status of river health. To evaluate the influence of watershed hydropower development and associated dam construction on the Wubu and Zaodu rivers in Southwest China, River Habitat Survey (RHS) and Dendritic Connectivity Index (DCI) were used to assess the river physical habitat quality and longitudinal connectivity. The results indicated that the length of near-natural, reservoir, and water-reduced reaches on the Wubu River were 20.48, 43.34, 18.09 km, which were 25.0%, 52.9%, and 22.1% of its entire main stream, respectively. The length of near-natural, reservoir, and water-reduced reaches on the Zaodu River were 58.61, 8.28, and 18.99 km, which were 57.5%, 8.1%, and 18.6% of its entire main stream, respectively. As a result of watershed hydropower development, river segments of the Wubu River increased from 26 to 29 reaches and those of the Zaodu River increased from two to five reaches. The DCI of the two rivers decreased by 7.8% and 38.0%, respectively. Habitat Quality Assessment (HQA) of the water-reduced reaches on the Wubu River decreased by 14.1%, whereas that of reservoir reaches was not significantly influenced by watershed hydropower development. The HQA of water-reduced and near-natural reaches on the Zaodu River were not significantly different. The HQA of reservoir reaches on the Zaodu River behind two high dams were significantly different from near-natural reaches. The influence of watershed hydropower development and associated dam construction on the physical habitat of the two rivers was associated with dam location, number and distribution of river segments before dam construction, fluvial geomorphological character, and hydropower resources exploration methods.