Streamflow augmentation with treated wastewater has been suggested as a strategy for increasing flow in streams, but at the same time, concern has been raised regarding the possible deterioration of water quality. In this study, the spatial and temporal distributions of nutrient uptake rates and macroinvertebrates were measured in a Mediterranean lowland stream (Yarqon, Israel), upstream and downstream of treated wastewater input. Over the last decade, the average downstream reach’s nutrient demand, depicted as the uptake velocities of NH₄ ⁺–N, NO₃ ⁻–N, and PO₄ ³⁻–P, increased by factors of 50, 10, and 6, respectively. The decrease in the ambient concentration of NH₄ ⁺–N, from an average of 39 to 2.8 mg L⁻¹ after upgrading the effluent quality, was the main reason for the observed improvements in uptake velocities. Nevertheless, the uptake length in the Yarqon Stream after the improvement in the quality of the treated wastewater was improved only for NH₄ ⁺–N, and deteriorated for NO₃ ⁻–N, and PO₄ ³⁻–P. Following the improvement in water quality, the uptake velocities and the macroinvertebrate communities in the downstream section are currently not significantly different from those in the upstream section. The macroinvertebrate assemblage structure reveals that tolerant taxa dominate the stream, and the increase of the taxa richness in the downstream section is attributed to rare and more sensitive taxa that recolonized this section following water quality improvement. The results suggest that improving the quality of the treated wastewater that is used for stream flow augmentation can have a positive effect on nutrient uptake velocities and macroinvertebrate assemblage structure. However, further ecological and economical cost-benefit analysis is needed to evaluate the feasibility of using treated wastewater augmentation for Mediterranean stream restoration.