A recent U.S. Department of Energy study estimated that more than one billion tons of biofuel feedstock could be produced by 2030 in the United States from increased corn yield, and changes in agricultural and forest residue management and land uses. To understand the implications of such increased production on water resources and stream quality at regional and local scales, we have applied a watershed model for the Upper Mississippi River Basin, where most of the current and future crop/residue-based biofuel production is expected. The model simulates changes in water quality (soil erosion, nitrogen and phosphorus loadings in streams) and resources (soil-water content, evapotranspiration, and runoff) under projected biofuel production versus the 2006 baseline year and a business-as-usual scenario. The basin average results suggest that the projected feedstock production could change the rate of evapotranspiration in the UMRB by approximately +2%, soil-water content by about -2%, and discharge to streams by -5% from the baseline scenario. However, unlike the impacts on regional water availability, the projected feedstock production has a mixed effect on water quality, resulting in 12% and 45% increases in annual suspended sediment and total phosphorus loadings, respectively, but a 3% decrease in total nitrogen loading. These differences in water quantity and quality are statistically significant (p < 0.05). The basin responses are further analyzed at monthly time steps and finer spatial scales to evaluate underlying physical processes, which would be essential for future optimization of environmentally sustainable biofuel productions.