Urbanization of watersheds can impose multiple stressors on stream, wetland, and lake ecosystems. Sediment contamination, alterations to the natural hydrologic regime, and nutrient loading are examples of these stressors which often occur simultaneously. As a consequence, restoration is challenged by the multi-stressor reality of most urban watersheds. The goal of this study was to compare two watersheds in western Michigan, both with substantial urban development, but with different levels of sediment contamination resulting from historic industrial activities, to determine the effects of contamination on invertebrate and fish community structure. The study included multiple sites on both streams, two wetlands adjacent to each stream, and the embayments where each stream emptied into Mona Lake. We compared a suite of abiotic parameters including sediment contamination, sediment toxicity, and water column chemical/physical conditions as well as fish and invertebrate community structure. Sediment contaminants, including heavy metals and polycyclic aromatic hydrocarbons, were found in higher concentrations and survival of test organisms in toxicity bioassays was reduced in the more industrialized watershed. Fewer insect taxa, especially the sensitive Ephemeroptera, Plecoptera, and Trichoptera, were found in the more industrialized system. Fish taxa richness and catch per unit effort were reduced in the wetlands of the more industrialized watershed as well and both invertebrate and fish index of biotic integrity scores were also lower in the more industrialized system. Our study demonstrates that contamination due to historic industrial activities can have substantial and lasting effects on biotic communities of multiple habitat types well downstream of where the activities occurred.