Exotic plants have invaded the riparian zones of many streams worldwide, but their consequences for stream fauna are seldom fully appreciated, especially when effects are sublethal. In northern New South Wales, Australia, the exotic tree camphor laurel (Cinnamomum camphora) has aggressively invaded riparian zones of many subtropical streams, often forming monocultures and outcompeting native vegetation. In forested streams, leaf litter provides a major source of food for some stream fauna and is broken down by shredding invertebrates. We hypothesized that shredder densities would be reduced in streams where the riparian zone was dominated by camphor laurel because of the reputed chemical toxicity of the leaf litter. We also investigated the sublethal effects of camphor laurel litter by comparing growth rates of larvae of the common shredding caddisfly Anisocentropus (Calamoceratidae:Trichoptera) reared on a diet of camphor laurel vs native leaf litter. Shredder densities were significantly lower in streams where camphor laurel constituted >38% of the benthic leaf litter than in streams with a lower percentage of camphor laurel litter (0.43 ± 0.13 vs 1.43 ± 0.28 individuals/g dry mass of litter; mean ± SE). Shredder densities were greater on artificial packs of native leaf litter than on packs of camphor laurel litter in camphor laurel–infested streams (3.37 ± 1.01 vs 1.40 ± 0.46 ind./g dry mass of litter). However, shredder densities did not differ between leaf-litter types in streams lined with native vegetation. Anisocentropus growth was retarded when larvae were fed only camphor laurel compared to those reared on native leaf litter. This native caddisfly used camphor laurel leaves for case construction, but impaired larval growth in infested streams implies a sublethal impact that has repercussions for energy transfer to higher trophic levels (e.g., predatory fish). Our findings suggest effects similar to those often reported for shredder assemblages in temperate streams subject to invasion by exotic riparian plants, indicating that the tropical–temperate differences in this aspect of leaf breakdown might not be as marked as previously suspected. Carefully managed river restoration to remove camphor laurel to allow recovery by native vegetation is recommended in these streams. Population dynamics of Anisocentropus could provide a useful indicator of the ecological success of such restoration.