Study of the degradation of urban stream ecosystems has been an important focus of urban ecology. During urbanization, infrastructure such as dams and other water projects can have a significant impact on the stream ecosystem. Dams create barriers, upstream and downstream, which hinder the migration of benthic invertebrates, change their living environment and affect their reproductive success, negatively affecting the macroinvertebrate community and its structure. This destroys the integrity of the stream ecosystem. To date, there has been no published research on this topic in China. Therefore, we surveyed the macroinvertebrate assemblages of nine sites (six in urban streams with run-of stream dams and three in reference forest streams) in August, in Xitiao River catchment, Anji County, Zhejiang Province. Using the data collected, we explored the biological degradation of urban streams and the impact of run-of stream dams on the structure and composition of the macroinvertebrate community as well as on a range of biochemical parameters. Multiple comparison and non-parametric tests were used to compare the biochemical parameters of the different stream types, performed using SPSS 18.0 statistical software. Non-metric multidimensional scaling (NMDS) analysis was used to compare the community composition, performed using Primer 6.0 software. Our results showed that the main substrate components of the reference sites were boulders (35.92%) and cobbles (33.66%), while the substrate of the urban streams was mostly gravel (57.97%). Water temperature, conductivity, and concentrations of total nitrogen and total phosphorous were all significantly (P<0.05) higher in urban streams than in reference streams, whereas total taxa richness and EPT (Ephemeroptera, Plecoptera and Trichoptera) taxa richness were significantly (P<0.05) lower in the urban streams than in the reference streams. Differences in velocity (P=0.273) and depth/width (P=3.92) between sites above and below the dams were not significant. Dissolved oxygen, pH, total nitrogen concentration, water temperature and conductivity were also very similar between sites above and below the dams. An exception to this was that total phosphorus concentration was greater below the dams than above the dams. Moreover, total taxa richness, EPT taxa richness, Shannon diversity index and evenness index of the sites above and below the dams were similar. However, the biotic index was higher below dams than above dams. In addition, the ratio of sensitive taxa to tolerant taxa was lower at sites below dams, and the ratio of predators to collector-gatherers was higher at the sites below dams. Furthermore, NMDS analysis demonstrated that the macroinvertebrate community composition greatly varied between the sites above and below the dams in these urban streams. These results suggested that the sediment composition, water quality and benthic community structure had been significantly degraded in urban streams, particularly downstream of the dams. These observations are preliminary since they are based on a survey conducted in August only, and therefore do not allow comprehensive assessment of the ecological effects of dam constructions. However, our findings indicate that there may be negative impacts and support the need for regular and long-term observations of the macroinvertebrate community in urban streams with dams.