Effective catchment management in the face of landuse alteration depends on our ability to quantify ecologically significant changes and to discriminate among varying levels of impact. We compared the efficiency of traditional structural indices of change (species composition) with functional measures based on species traits (including life-history, trophic, and morphological features) in an analysis of grassland streams along a gradient of agricultural development (ungrazed native tussock, grazed tussock, extensively grazed pasture, and intensive dairy and deer farming). Streams were categorized in relation to overall agricultural intensity, and separately in terms of increasing nutrient concentrations and fine sediments on the streambed. Only 5 of 60 individual species demonstrated a significant separation across the landuse gradient, whereas 14 of 53 trait categories did so. Traits associated with population resilience (short generation time, asexual reproduction) became more prevalent with more intense agricultural pressure, reflecting predicted increases in intensity and frequency of stream disturbance. We observed a shift away from a tendency to lay unattached eggs at the water surface of the stream, reflecting the increasing likelihood of smothering by sediment, as well as increases in highly flexible and streamlined body shapes. Principal components and correspondence analyses involving species or trait composition all were able to discriminate landuse practises, but more of the overall between-landuse variance was accounted for by trait composition than species composition. All biological measures (species or trait composition) were correlated with both nutrient concentrations and sedimentation. Nutrient concentrations were better related to species and trait-category densities, whereas sedimentation was related to trait-category relative abundances. Overall, species traits successfully complemented traditional structural measures by helping to differentiate the consequences of landuse intensification in grassland stream communities. Rather than simply recording a loss or reduction of species, our functional approach was able to identify sensitive life-history characteristics linked to the functioning of ecosystems, thereby facilitating the development of targeted management actions.