Levels of inorganic nitrogen species (ammonia, nitrite, and nitrate), ammonia oxidation potential (AOP), and diversity of ammonia-oxidizing bacteria (AOB) were studied in the sediments of a 50-km-long segment of an ephemeral stream in the Negev desert, receiving untreated wastewater. Water analysis in downstream sampling points showed reductions of 91.7% in biological oxygen demand, 87.7% in chemical oxygen demand, 73.9% in total nitrogen, and 72.8% in total ammonia nitrogen. Significant AOP levels in the sediment were detected mainly in the fall and spring seasons. Denaturing gradient gel electrophoresis of AOB 16S rRNA gene fragments showed that in most sampling points, the streambed was dominated by Nitrosospira cluster 3 strains similar to those dominating the stream bank's soils and sediments in nearby springs. Nitrosomonas strains introduced by discharged wastewater and others dominated some sections of the stream characterized by high organic carbon levels. The results suggest that climatic conditions in the Negev desert select for AOB belonging to Nitrosospira cluster 3, and these conditions dominate the aquatic environment effect along most of the stream sections. In addition, the nitrification-denitrification processes were not sufficient to reduce nitrogen levels in the sediment and prevent the eutrophication of some sections of the stream ecosystem. Thus, the discharge of high nitrogen wastewater into desert streams should be done carefully as it may endanger the already fragile ecosystem.